The end of 2018 saw U.S. credit debt at its highest levels in history, capping out at some $870 billion, according to the Federal Reserve Bank. The previous record was back in 2008 during the height of the financial crisis, but this year, the numbers swelled thanks to a glut of holiday spending both here in Kentucky and around the country. For some families, this means it's time to tighten up a budget and curb spending, but for others, this could mean crippling debt. Thankfully, there are a variety of options available to those in need, including debt restructuring and Chapter 7 bankruptcy.
A recent survey suggested that nearly 1 in 5 Americans are dependent upon credit for day-to-day expenses. With interest rates falling between 15 and 25 percent, this can mean ballooning debt on any budget. Financial advisors suggest a good first step to handling debt of this type is to confirm how much is actually owed by writing down a full account of all balances on credit cards. From here, a debtor can ensure he or she is at least paying the minimum amount owed on accounts to avoid delinquency.
Of course, the next step is a necessary budget. While some people balk at the idea of budgeting, it is an important step on the road to financial security, as many people without a plan lose track of spending and end up exacerbating debt. Ultimately, prioritizing paying down debt is one of the only tried-and-true methods of eliminating it altogether.
For some Kentucky residents, this is not feasible for any of a variety of reasons. Thankfully, Chapter 7 bankruptcy remains an option for those who find themselves fighting a hopeless battle against interest rates. Chapter 7 liquidates assets to pay down existing debts, and in some cases, will erase unsecured debts like credit cards. This can put an individual or family in a truly advantageous position in the return to financial stability.