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Is overwhelming debt from credit cards cause of future problems?

Americans find themselves facing financial problems for a variety of reasons. However, one of the most common causes of financial concerns for American families in Texas is overwhelming debt from credit cards. This can have a highly detrimental effect on one’s credit score, which can result in further problems down the road.

When a person falls behind on credit card payments, it can bring down his or her credit score. Since one’s credit score is used to calculate terms for financing and loans, this can increase the costs of obtaining a loan. This means automobile loans and mortgage rates will increase. Also, insurance premiums will be higher for those with a lower credit rating.

One way to battle overwhelming credit card debt is through refinancing long-term debt held on credit cards by contacting a local banking institution. However, if that does not work, one can also transfer balances on credit cards with higher interest rates to credit cards with lower rates. It is also possible to attempt to renegotiate with one’s credit card company.

On the other hand, many times these remedies for handling overwhelming debt from credit cards may not work out as one would hope. In this case, it may be in one’s best interest to consider filing for personal bankruptcy. A Chapter 7 bankruptcy will have the power to discharge all credit card debts in many instances in Texas or in any other state. However, each situation is different; therefore, it is important to understand how to apply the law to one's specific case.

Source: recordonline.com, "Advice From the Field: Manage your credit card debt to keep finances in order", Charlene Maurer Finerty, May 19, 2014

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