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Consumer Defaults Continue to Climb in 2018

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According to a new report, default rates for bank cards have surged to their highest level since 2012. Despite the robust jobs market in the United States, many consumers remain overextended, unable to make even the minimum payment on their debts. If this describes your situation, consider bankruptcy as an option for clearing out your debt.

Higher Defaults

According to the S&P/Experian Consumer Credit Default Indices, the default rate for bank cards has soared seven basis points, reaching 3.64%. As reported by Yahoo News, Miami was one of two major cities that saw an increase in composite default rates in February 2018. The report is compiled using data from Experian, one of the country’s largest credit bureaus, which has access to information from over 11,500 different lenders.

Experts could not identify what has caused the spike in defaults. For example, they have pointed out that interest rates on bank cards have not changed much over the past 2-3 years, and that other measures of consumer debt do not indicate rising credit problems. Nevertheless, the increase in the default indices perhaps points to unrecognized problems that could be working their way through the economy.

Bankruptcy or Default?

If you are feeling financially stressed, you should seriously consider filing for bankruptcy. Consumers typically choose between a Chapter 7 or a Chapter 13 bankruptcy. With a Chapter 7, you can quickly wipe out unsecured debts like credit card debt or medical debt in a matter of months. With a Chapter 13, you establish a repayment plan that lasts 3-5 years, contributing as much income as possible to your creditors. At the end of the payment period, any unpaid unsecured debt is discharged.

Many of our clients fear bankruptcy, believing it will permanently destroy their credit history. However, a Chapter 7 falls off your credit report after 10 years, and its negative impact lessens as time passes. It is possible to begin building your credit back up in a few years. Many of our clients have even managed to get new credit cards and loans within a couple of years of filing.

Instead of filing for bankruptcy, some consumers simply choose to default. This is not a better option. For one thing, the debt doesn’t simply disappear. For another, defaults will show up on your credit report, and accounts sent to collections can stay on your credit report for 7 years. You also don’t get any peace of mind that comes with filing for bankruptcy because collection agents can contact you day and night, or they can sue you.

Contact a Plantation, Florida Bankruptcy Lawyer with Questions

No one should apply for bankruptcy without giving serious thought to alternatives. Nevertheless, bankruptcy is often the best option for getting out from under your debts. At Nowack & Olson in Plantation, we help clients navigate the bankruptcy process and have successfully obtained countless discharges that have wiped out millions of dollars in debt. For a free consultation, reach out to one of our bankruptcy lawyers today.

Resources:

finance.yahoo.com/news/p-experian-consumer-credit-default-140700674.html

money.cnn.com/2018/03/09/news/economy/february-jobs-report/index.html

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