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What to know about debt in America

On Behalf of | Apr 4, 2018 | Chapter 13 Bankruptcy

The typical Texas resident has some level of debt. According to Experian, the average American household debt excluding mortgages was $24,706 in 2017. The average credit card debt last year totaled $6,354, which was a 2.7 increase throughout 2017. Those in the Generation X and Millennial age groups saw their credit card burden go up the most. Retail credit card debt grew 4 percent for an average balance of $1,841.

Overall, Americans owed $1.02 trillion in combined debt as of June 2017. In the third quarter of 2017, 7.5 percent of all credit card debt was delinquent by 90 days or more. While this may show that Americans are having trouble keeping up with their debt, there are ways they can get a better handle on it. First, it is a good idea to prioritize which debts to pay off as soon as possible.

Generally, paying down a mortgage or student loan isn’t the best strategy because they typically come with low interest rates. However, paying down auto loan and credit card debts ahead of schedule is ideal because cars are a depreciating asset and credit cards come with high interest rates. While first paying down debts with the highest interest rates can save more money overall, taking care of debts with the lowest balances may provide a psychological boost.

Filing for Chapter 13 bankruptcy could provide many benefits to those who are struggling to repay their debt. In many cases, it will prevent creditors from contacting a debtor or taking actions to collect on a debt. Debtors may generally keep property such as a home or car assuming that they keep up with their plan payments. An attorney could help with the filing process.