Credit cards are an important financial tool for people in all different personal circumstances. Families often require credit cards to cover unexpected expenses, ranging from a large deductible when their middle schooler breaks their leg at a basketball game to a refrigerator that requires immediate replacement.
However, high credit card balances tend to damage household budgets over time and serve as an indicator of financial strain. The second quarter of 2023 showed a troubling trend. Household debts increased from $16 trillion to $17.06 trillion. A substantial portion of that increase came from surging credit card balances. The first quarter in 2023 saw households carrying $986 billion in credit card debt, but that increased to $1.03 trillion in the second quarter.
Personal consumer loans and retail credit offers also increased by $15 billion, while mortgage debt remained relatively steady. Many of the heads of American households with climbing credit card balances may eventually need to turn to bankruptcy to regain control of their household finances.
Bankruptcy is a source of help, not shame
Despite how common bankruptcy actually is, may people still shy away from seeking relief because they are concerned about being stigmatized. They imagine that everyone in their community will know that they have filed for bankruptcy and judge them. While it is true that the courts typically publish notice about bankruptcy filings and those who pull credit reports will see that someone has a bankruptcy on their record, there isn’t as much stigma associated with bankruptcy as people think.
Most people and employers recognize that individuals may end up needing to file for bankruptcy due to circumstances beyond their control. When people have credit card debts and other financial obligations they cannot pay off in full, bankruptcy protects them from collection activity that could worsen their circumstances, and ultimately helps them regain financial control.
The automatic stay that the courts grant when someone files prevent creditor lawsuits from proceeding and can temporarily halt foreclosure. If someone’s bankruptcy is successful, the discharge of their unsecured debts can free up more of their budget to help them pay off regrets that are not eligible for discharge.
The right plan can make all the difference
Bankruptcy is certainly not a one-size-fits-all process. There are different types of bankruptcy available and different rules that apply depending on someone’s circumstances. Those who seek legal guidance can more effectively choose the right type of bankruptcy for their circumstances and create a plan that will lead to better financial health in the future. If you need bankruptcy guidance in Westfield or Newark, New Jersey, the Law Offices of Darin D. Pinto, P.C. can help. Bankruptcy attorney Darin Pinto has nearly 30 years of experience helping individuals build custom solutions to alleviate their financial hardships. Call 908-913-6168 or contact the firm online.