Credit Card Debt Falls, but Credit Scores Fall Too in California

Liviakis Law Firm Team

With the downturn in the economy in the last several years many Americans ended up increasing their debt load just to get by. This included not paying off mortgages or increasing credit card debt.

However, according to a recent monthly report on debt, the amount of credit card debt and mortgage debt owed has dropped for the average Californian. Unfortunately, it looks like it is coinciding with credit scores dropping too.

At the end of the year, the average Californian owed around $314,000 on their mortgage. In June, the average Californian owed only around $301,000. Credit card debt dropped substantially as well. In June, the average Californian owed around $5,600. But at the end of 2012, that figure was close to $6,400.

The bad news is that along with this data there are indications that credit scores are also dropping. In June of 2011, the average credit score was 685. This June of this year it was 671.

One possible contributing factor is that filing for bankruptcy can discharge credit card debt, but is can also affect your credit score. There are two types of personal bankruptcy: Chapter 7 and Chapter 13. In a Chapter 7 filing the debtor can discharge debts, including all credit card debt. In Chapter 13, the debtor creates a debt repayment plan that can lower interest rates and fees, but the debt must still be repaid.

One main benefit of filing for any bankruptcy is that is puts an automatic stay on all creditor actions. This means that all creditor actions, including foreclosure, mechanics liens and wage garnishments, are stopped after it is filed.

Source: Sacramento Business Journal, “Average credit card, mortgage debt drops in state,” Melissa Wiese June 11, 2013

Our Office

Former Office
1215 K St

Sacramento, CA 95814

Phone: 916 459 2364
New Office
2377 Gold Meadow Way
#100

Gold River, CA 95670

Phone: 916 459 2364

Client Reviews

Mr. Liviakis is extremely knowledgeable and answered all of the questions that we had about our situation. He made a really difficult time manageable with his help and expertise. I would definitely recommend...

Lindsey Joyner

Mik is a great attorney. Very friendly & professional. Price is was bit high compared to other firms. Probably the highest I've seen. If price your thing, checkout other firms. Other than that, Mik will get the...

Oi Vinn

Mik helped us save our home and settle with creditors during the pandemic after we were forced to close our family business for over a year. I am forever grateful. He was kind and professional and followed up...

Jina and Steven Hale

Mr. Liviakis was timely and professional. He patiently answered questions and explained the process. He provided handouts that clearly outlined due dates. The firm's paralegal was very easy to work with. I...

Wes Pohl

I nothing but great Experiences, and great service.

Tony Boone

Positive: Professionalism, Quality, Responsiveness, Value

Linda Todd

Contact Us

Fill out the contact form or call us at (916) 459-2364 to schedule your free consultation.
  • Free Consultation
  • Phone Appointments Available
  • Talk to Award Winning Attorney Today

Leave Us a Message