Consumers are repaying a record amount of credit card debt — another sign that more are trying to get their financial house in order, according to a new report.
Last year, consumers repaid more than $122 million to their creditors through a national, nonprofit credit counseling group called CredAbility, which is based in Atlanta. It’s a 3 percent increase from 2009 and a record for the 47-year-old organization, which was formerly known as the Consumer Credit Counseling Service of Greater Atlanta.
Already this year, the numbers continue to rise. In the first quarter, repayments are up 9.5 percent from a year ago, CredAbility said.
While the Great Recession caused personal bankruptcy filings to soar, other consumers are choosing different paths. Some are beefing up their savings, some are reducing debt and some are doing both.
“Many consumers are deciding to take control of their financial lives by working with their creditors to pay down their debt, even if it takes 36 months or longer,” Vicki Williams, vice president of Debt Management Plan Services for CredAbility, said in a statement.
A debt management plan helps consumers struggling with credit card debt to take advantage of reduced payments with creditors, CredAbility said. Many creditors offer favorable repayment terms to consumers who enroll in a debt plan, including significantly lower interest rates. The creditors may also eliminate late fees and penalties once a consumer enrolls.
In 2010, the average income of a person enrolled in a CredAbility debt management plan was $53,880 — a 4 percent increase over 2009, CredAbility said. Each person had an average of $24,266 in credit card debt in 2010 — a 4.5 percent increase from the year before. The average age was 48 — up from 45 in 2009.
On Tuesday, you can meet a Gwinnett couple behind the numbers. My column will discuss how they got into an $83,000 financial mess and how they paid it off over five years.
- Henry Unger, The Biz Beat
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