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From holiday season to tax time, credit card debt is a factor

The state of Tennessee has been hit hard by the unsettled economy, and many have been put in a situation where bankruptcy is the only way out. Others have tried to delay proceedings by borrowing against the future, heavily relying on their credit cards and taking on new debt to try and cover daily, weekly and monthly expenses.

The holiday season only compounds not just the stress associated with your finances, but the actual spending itself. Recently, the Federal Reserve released new figures that show consumer credit increased $19.31 billion in December, which puts the national total for outstanding credit at $2.498 trillion to close 2011. The rise in December was almost three times what financial analysts had originally predicted.

Credit card debt is included in a category called revolving credit, which accounted for $2.76 billion of the inflated consumer credit rate. While increased consumer credit could point to a potentially good sign, there could also be a bleak economic outlook based on the Federal Reserve's new information.

The optimist will say that people are becoming more secure with where the economy sits, and thus are more willing to take on added debt. The pessimist, however, would say that consumers are under heavy financial burdens, and because of the economy they have had few options to resolve their fiscal situation. This condition prompted a more fervent use of their credit cards, piling up new debt.

Well the holidays are over, and now its tax time. Many people prefer to do their own tax filing, and while that is a fine approach, it is even better to bring in an experienced legal professional. The knowledge they can bring to the table can benefit you greatly by enhancing your refund or discovering potentially troubling errors that few people would recognize.

Source: Wall Street Journal, "Credit-Card Borrowing Surged Over Holiday Period," Jeff Bater and Jeffrey Sparshott, Feb. 7, 2012

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