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Credit card debt a troubling problem

In today's troubled economy, many people in New York and nationwide are experiencing difficulty handling credit card debt. For many, such debts mount up based on accumulating interest and may be a contributing fact to the need to file a personal bankruptcy of either the Chapter 7 or Chapter 13 variety.

Total credit card debt in recent years mounted to more than $1 trillion. This clearly can be a source of difficulty in an era of high unemployment or experiencing cutbacks in hours or pay. A federal law passed in 2009 made it more difficult to open new credit card accounts for young people under 21. No, they either have to have their own income to justify the extending of credit or have an acceptable co-signer. Credit card companies are now also explicitly prohibited from directly marketing credit cards to students on campus, which was previously widespread.

Interestingly enough, however, recently conducted research indicates that such young people who do receive a credit card at an early age turn out to be better able to manage credit card debt that their elders. Comparing credit card holders who are ages 40 to 44 and those who are 19, the 19-year-olds have a 12 percent lower incidence of being 90 days in arrears than the older card holders. Those who get their first credit card of their own at age 23 are more likely to default on the obligation that a person issued their first credit card at age 21.

Younger people from ages 18 to 25 might have more short-term delinquencies on cards than older cardholders, such as one or two months, but tend to learn and recover from these problems, researchers also found. Some professionals in the credit card industry view young people getting credit cards as an opportunity to teach them financial literacy and how to handle debt.

For those who are facing insurmountable debt, bankruptcy may be the answer. While it's not right for everyone, an attorney could provide advice and options that were not previously considered.

Source: Forbes, "Your Teen May Be Better at Managing Her Credit Card Than You are" Samantha Sharf, Oct. 18, 2013

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