Americans paid off record amounts of debt between 2000 and 2022. During the second quarter of 2020, people living in California and other United States locations paid off $76 billion of credit card debt and an additional $49 billion in the first quarter of 2021. The opposite is happening now as prices have increased dramatically on food, energy and other basic needs, leading consumers to rely more on their credit cards. At the end of 2022, collectively, Americans owed $986 billion in credit card debt, and the figure continues to climb.
How high is credit card debt?
The average American owes $7,279 on their credit cards. From December 2021 to December 2022, America’s average credit card debt grew by 10%. Residents in Connecticut have the most significant amount of credit card debt, with the average cardholder carrying a $9,408 balance. Meanwhile, those in Kentucky have the lowest credit card debt, with the average cardholder having $5,408. In California, the average cardholder has $7,758 in credit card debt.
What to do if you cannot pay your debts?
Many consumers are struggling to pay their credit card bills. For these individuals, Chapter 7 may be an answer. Under this type of bankruptcy, a trustee is named who sells the borrower’s nonexempt property and gives the proceeds to the creditors. Some kinds of debt are not dismissible under a Chapter 7 bankruptcy, including child support, alimony and student debt.
Qualifying for Chapter 7 bankruptcy
Generally, people can qualify for Chapter 7 bankruptcy if they make less than the average person in their state. It must have been at least six years since you filed for Chapter 7 or 13 bankruptcy. If you do not qualify the first time, you must wait 181 days before you can try again.
Credit card debt is increasing, and those who cannot pay their bills may want to consider Chapter 7 bankruptcy.