The struggling U.S. economy brings financial challenges to the homes of many Birmingham residents. Jobs are hard to find, salaries are cut and hours are reduced. As people's income is limited, it frequently becomes harder to deal with unexpected hardships, like medical emergencies, urgent home maintenance or a car in need of repair. Many people accumulate credit card debt during these times, fully expecting to pay it off when their finances improve. Unfortunately, this is not always as easy as it sounds.
Alabama has recently received the unfortunate distinction of being the state with the second lowest credit score in the country. In addition, the state's credit score appears to be falling as its score in January was nine points lower than it was the year prior and four points lower than the previous month. The average credit card debt has decreased compared to last year, however. The average debt this January was just over $4,500 while the average debt in January 2012 was over $5,200. In contrast, the average mortgage balances, auto debt and student loan debt have all increased over the last year.
Credit cards are big business, and credit card companies know that many people rely on them to make ends meet. While credit cards can be a lifesaver to people in need of immediate financial assistance, it can be quite easy to accumulate high levels of credit card debt. Because of the high interest rates and fees associated with many cards, many Alabama residents may find themselves trapped by their credit card debt even after their overall financial situations have begun to improve.
Fortunately, filing for bankruptcy can help people facing these financial challenges to get back on their feet. Chapter 7 bankruptcy can be one of the best options for people who need to take back control of their finances. In addition to helping put an end to creditor harassment, liquidation under Chapter 7 can discharge a range of debts, including credit cards, medical bills, personal loans, car loans and even payday loans. As the process usually takes between four and five months, Alabama residents may find themselves headed for a brighter future sooner than they imagined.
Source: Birmingham Business Journal, "Credit Karma: Alabama has second lowest average credit score in U.S.," Antrenise Cole, Feb. 25, 2013