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Credit card debt on the rise

New market signs are showing consumer optimism in the nation may be recovering in the wake of the Great Recession. Shoppers decided to break out their credit cards en masse in the month of May, according to new statistics from Washington, D.C., and elsewhere. It is not yet clear whether this move will lead to an increase in required debt relief for overextended buyers.

Consumer credit soared to $19.6 billion in May after a lull at $10.9 billion in April. Surprisingly, this increase was considered modest. Wall Street professionals had expected a $12 billion jump. Revolving credit, including credit cards, has been on the decline since the Great Recession hit. Now, consumer confidence may be inspiring new spending.

The majority of Americans are burdened with non-revolving debt. This includes consumer loans and car loans, among other similar debts. Growth in that segment appears to be relatively stagnant, however, according to financial professionals. Consumers increased their non-revolving loans from $1.97 trillion to $1.98 trillion in the past year.

The new card statistics show that consumers are increasingly willing to build up credit card balances. This could be due to growing consumer confidence caused by more job security. In addition to the credit report, researchers say about 260,000 new jobs were added in the past two months. Consumers appear to still be pessimistic about raises, but they do think jobs will be more plentiful in the near future.

If you are considering debt relief, it is important to remember that only certain types of debts can be discharged in bankruptcy. Revolving credit is more likely to qualify for discharge during a Chapter 7 proceeding than non-revolving sources. Student loans, for example, are incredibly difficult to discharge, requiring proof of a catastrophic accident causing disability. To find out more about your credit report and legal options, consider talking to a bankruptcy team that includes attorneys and financial planners. These professionals can help you choose the right debt relief method for your personal situation.

Source: www.usatoday.com, "Consumers break out the credit cards in May" John Waggoner, Jul. 08, 2013

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