How Inflation Is Changing Our Debt

Over the last few months, inflation has skyrocketed nationwide while wages remain the same. I’ve seen rising debt from inflation in Memphis leave families scrambling to cover their basic needs.

Here’s what you need to know about these higher costs, how they may affect you, and what you can do about it.

What Is Inflation and Why Is This Happening?

Inflation happens when the costs of regular consumer goods like food and gas go up while everything else remains the same. You have the same budget, the same take-home pay, the same basic needs, but everything costs more. As a result, your dollars don’t go as far as they did a few years or even a few weeks ago.

In January 2022, prices rose 7.5% compared to 2021. This is the biggest change in inflation since the early 1980s, and it’s thrown everyone for a loop.

There are a number of reasons for this inflation:

  • The pandemic caused supply chain problems, so goods couldn’t be delivered on time.
  • World events have affected oil and gas supply.
  • In part because of supply chain issues and cost of gas, companies increased their prices.
  • Low interest rates created a boost in the housing and car markets and made people demand more loans.
  • And other political and economic factors, some going back many decades.

Economists don’t expect inflation to stop any time soon, and that could mean we’re about to experience a recession. So how is this affecting the average family, and what can you do to protect yourself?

Credit Card Debt and Rising Inflation

The average American family is losing $300 a month to inflation. In Memphis, you can see this most starkly at the grocery store and gas station. Memphians aren’t used to paying over $4.00 a gallon for gas, and most of us don’t have secret stashes of money stored away to cover the cost.

Instead, you may be like the millions of other Americans who’ve taken out credit card debt to cover their basic expenses.

Credit card debt rose by $52 billion in the last three months of 2021—the biggest quarterly increase in credit card debt since the Fed started collecting data. By the end of last year, credit card balances hit $860 billion. People also took out more debt to cover purchases for cars and homes.

And that was before all the costs went up even more in early 2022!

Some families may be able to pay off that debt. Maybe they have ways to save elsewhere or they were extremely lucky and got a big raise. But for most people, this new credit card debt could become impossible to pay off. And those new home and car loans? They could become burdens you don’t know how to handle.

How Chapter 13 Can Help With Inflation

Chapter 13 is a type of bankruptcy that works wonders for families struggling with inflation. It allows you to set up a personalized payment plan to cover your debts in a way you can actually afford.

Because it’s protected by federal law, this payment plan is signed into stone. The banks can’t raise your rates suddenly or demand you pay back more than you’re able all of a sudden. They can’t take your car or foreclose on your home.

You can rest in the fact your basic needs are covered, without having to worry about what will happen to the economy tomorrow.

Get Help with a Chapter 13 Today

My law firm has helped thousands of people file Chapter 13 to get out of debt and stay out of debt. If you’re struggling with the cost of rising inflation, we can help you, too.

If you’re interested in learning more, give us a call at 901-327-2100 or fill out the form on this page. We can talk over your options and see if Chapter 13 might be the right solution for you. The conversation is totally free, no strings attached.

Don’t let inflation steal more from you than it already has. Contact me today for a free appointment.