Debt is a common problem plaguing Memphis, as well as the rest of the United States. Many people are facing growing financial problems, often caused by credit card debt.
There is good news, however. Across the nation, credit scores are on the rise. Many experts attribute this rise to people paying down their credit card debt and interest. Some of the hardest hit areas of the economic downturn are seeing the largest increases in credit scores. Nationwide, the average credit score is up to 750, out of a possible 990.
In Memphis however, the average credit score is 711, one of the lowest in country. Many of us are still facing mounting credit card debt. Paying bills late and borrowing larger amounts are some of the common reasons why credit scores continue to fall.
When faced with mounting credit card debt and interest, a person can often turn to bankruptcy. Chapter 7 bankruptcy sometimes offers a way out of credit card debt. Chapter 7 bankruptcy, sometimes referred to as liquidation, offers an individual a way to pay some debts and to be released from others.
When filing for Chapter 7, an individual makes a list of all the assets he or she has. All of the assets are then turned over to the court and sold, and the proceeds from the sale given to the creditors. Some assets, such as pensions or motor vehicles are considered exempt from the liquidation and are not sold. Any debt remaining after the sale is wiped clean.
In many cases, the person filing for Chapter 7 does not have many, or any non-exempt assets. In these cases, the person is still released from credit obligations, but no assets are sold. Not all debt qualifies for Chapter 7 relief. Debts such as student loans or any domestic obligations are not wiped clean.
For those in debt it may feel like there is no way out. Bankruptcy often provides a way out of mounting credit card debt and the first step to a better financial future.
Source: Reuters, "Credit score increases show upturn in hard-hit cities," Mitch Lipka, Sept. 17, 2012