Credit card debt is a mounting problem for many Birmingham residents, including college students. Recent figures show that college students are taking on credit card debt at an alarming rate. In fact, the average undergraduate now has $2,500 in credit card debt. Once they graduate from college, former students are often unable to make even the minimum payments.
There are several reasons for graduates' inability to pay their credit card debt. In today's economy, graduates -- like the rest of the population -- are faced with lower-than-expected salaries, increased costs of living, unemployment and required student loan payments.
One of the most difficult things in dealing with credit card debt is the amount of time it takes to pay off as the result of high interest rates charged on credit card balances. Furthermore, once a person falls behind on payments, credit card companies charge high late fees and other penalties.
Falling behind on payments often has a snowball effect. If you fail to make your monthly payments, eventually your delinquent account will be referred to a collection agency. At that point, you may start to receive pressure from your creditors and face the possibility of a lawsuit. Although there are state and federal laws in place to protect consumers from harassment by debt collectors, constant collection calls can quickly become a source of stress.
If you have credit card debt and are unable to make your payments, bankruptcy may be a viable option. Depending on the type of bankruptcy for which you qualify, you may be able to get a partial or complete discharge of your credit card debt and other outstanding bills.
Source: Standard-Examiner, "Credit card debt can harm college students," Gordon Putnam, Dec. 27, 2012