According to the Philadelphia Federal Reserve Bank’s 2024 Q4 Insights Report, credit card delinquencies continued to rise, signaling growing consumer financial distress. The percentage of accounts making only the minimum payment reached a 12-year high, and account-based delinquency rates remained near or hit new record highs. These trends suggest that more consumers are struggling to manage their debt, even as credit access expands for wealthier borrowers.
As credit card debt climbs and more Americans struggle to make even the minimum payments, families in Kaufman County are feeling the financial squeeze. We sat down with local bankruptcy attorney Jenny Parks to discuss what steps residents should take if they’re overwhelmed by credit card debt—and how to know when it’s time to seek professional help.
What are the first steps someone should take if they realize they can no longer keep up with their credit card payments?Â
Schedule a bankruptcy appointment with bankruptcy attorney to find out what options might be available to you...most lawyers do not charge for this type of consultation.
At what point should someone consider speaking with a bankruptcy attorney rather than continuing to juggle payments?
This varies for everyone. People cope with the stress of owing money to others very differently. Some will let it eat at them to the point where they begin having health issues. If your health is beginning to deteriorate because of the stress or you don't see any light at the end of the tunnel, definitely seek legal advice. There may be options available.Â
Can negotiating directly with credit card companies lead to meaningful relief, or are most repayment plans still too burdensome?
Most credit card companies will not negotiate lower payments or settle for lesser amounts until you get several months behind on payments. Even then, the offers are cumbersome and unhelpful. Oftentimes, creditors will sell the debt and then you have a whole new set of problems with debt collectors calling you non stop. This just adds to your stress level, of course.
How do debt settlement programs compare to bankruptcy, and what risks do consumers need to be aware of?Â
I am in my 28th year of handling bankruptcy cases and I cannot tell you how many times I have filed a bankruptcy for someone who had been paying debt consolidation companies for either several months or years, to no avail. I rarely recommend this route because there are so many companies out there doing more damage than actually eliminating debt. All creditors do not have to participate in debt consolidation, but they do when you file a bankruptcy.Â
What are the main differences between Chapter 7 and Chapter 13 bankruptcy for someone dealing primarily with credit card debt?Â
Chapter 7 is designed for those consumers that make under a certain amount of money and are seeking to simply discharge unsecured debt and move on with a fresh start. Chapter 7 generally will not help with IRS debt, school loans and/or child support and you are responsible for paying back those secured items you wish to keep. Chapter 13 is designed for those people who either make too much money to qualify for a Chapter 7 or need time to pay back arrearages on their home, auto, child support, IRS debt, etc. Chapter 13 can work much like debt consolidation for your credit card debt, but with zero interest and everyone has to play ball. You will still, however, pay interest on your secured items listed in the plan. Â
How does filing bankruptcy impact a person’s credit score—and how long does that impact typically last?Â
A bankruptcy can stay on your credit report for 7-10 years, however, most of my clients are surprised how quickly after a completed bankruptcy that their credit begins to rebuild itself.
Are there any alternatives to bankruptcy that you recommend in certain situations, such as debt consolidation or credit counseling?Â
See above - not generally. If you don't qualify for a Chapter 7 and you have some cash to throw at settling the accounts, and they are very delinquent, sometimes collection agencies will settle for less than the amount owed. This varies from creditor to creditor drastically and you could get one settled and not another.Â
How does the recent trend of rising minimum payments and increased delinquencies affect the options available to consumers?
Consumers have never had a lot of options with regard to credit. We are generally at the mercy of the creditor. Interest rates and minimum payments are rising and this has caused delinquencies in payments and a rise in bankruptcy cases. Â
Is there a “best time” to file bankruptcy, or do people often wait too long before seeking legal help?
Many people wait far too long to file bankruptcy or even to seek legal counsel. I have many clients that don't come see me until they have judgments against them and the creditors have frozen or taken their money out of their bank account. With regard to Chapter 13 cases, consumers generally don't come see me until their home is set for foreclosure or the IRS has garnished their wages.Â
What common myths or misconceptions do people have about filing for bankruptcy?
Some people are embarrassed or feel like failures for not being able to pay their debt. Things happen...people lose jobs, lose spouses, get ill, or they co-sign for things that others don't pay for, etc. There are so many different reasons that people come to see me for bankruptcy advice and help. There is light at the end of the tunnel and there are many solutions. We have filed cases for all types of people, including doctors, lawyers, educators, law enforcement, elderly and the very young. Money problems don't target one demographic or profession. Everyone can use a helping hand once in a while and everyone's circumstances differ.Â
What advice would you give someone who is trying to decide between continuing to make minimum payments or using their savings to pay down high-interest credit card debt?
There is a reason that bankruptcy laws exist. They are there to help people. It's almost never a good idea to cash in retirement accounts or drain your savings to pay unsecured debt. Before you make any decisions in that regard, seek counsel. See what options are available to you and your family. There actually could be a simple fix or a better solution than what you are dealing with currently.  Â