According to Federal Reserve Data, Virginia residents and others have combined to accumulate $1.05 trillion in revolving consumer debt as of the fourth quarter of 2018. Consumers have accrued $870 billion in credit card debt, which beats the previous record high set in 2008. At the end of 2018, there were about 100 million more credit card accounts than in 2010. Between the final quarter of 2017 and 2018, there were an additional 37 million accounts that were 90 days past due.
The percentage of accounts that are 90 days past due has increased since 2016 to about 5%. However, this is still lower than in 2009 when delinquency rates were above 10%. Research shows that there is not necessarily a correlation between a person’s credit score and the amount of debt that he or she has. This is because credit scores generally track whether a person makes minimum payments each month.
Individuals who want to get their credit card spending under control are advised to create a realistic budget. They are also encouraged to not make purchases with a credit card if they cannot afford to repay them in a timely manner. Ideally, any charges made in a given month will be repaid by the end of the current billing cycle to avoid paying interest.
Filing for personal bankruptcy may be an effective way to reduce or eliminate credit card debt. A Chapter 7 bankruptcy may only take a few weeks or months to complete. Although Chapter 13 cases take longer to resolve, an individual may retain a home, car or other important property before and after the proceeding ends. Furthermore, creditors are generally not allowed to contact debtors or proceed with other collection activities after debtors have filed their petition for bankruptcy.