Virginia residents in the 25-to-34 age group have a high likelihood of struggling with debts. While some may assume that these millennials are mostly dealing with high student loan balances, credit card debts are more common. The 2018 Planning and Progress Study from Northwestern Mutual looked at the sources of debt for this demographic group and found that 24 percent of debts came from credit cards whereas only 16 percent resulted from student loans.
According to the study, a cycle of buying and borrowing increases credit card balances. Debt repayment appeared to be a low priority for many people and debts were more common than savings. Respondents were twice as likely to have credit card balances between $5,000 and $25,000 than personal savings.
When credit card debts reach a certain point, one might lack the income to ever pay off the balance because of high interest rates. If a debtor misses a payment, they could be penalized with a 30 percent interest rate plus late fees. This situation creates the debt spiral and default becomes very likely unless new sources of income are found.
A person confronted with rising debts and an inability to make payments could discuss legal options for debt relief with an attorney. One option is Chapter 13 bankruptcy, which would establish a manageable payment plan and potentially discharge portions of debts. An attorney could organize the person’s financial records and prepare extensive disclosures for the court. After filing for bankruptcy, an attorney could assume communications with creditors and halt harassment related to collection efforts. The assistance of an attorney could produce a timely decision from a bankruptcy court and help the debtor regain control of financial affairs.