Credit Card Debt: A Common Road to Bankruptcy

With the economy in turmoil, many people still deal with consequences of credit card debt. This phenomenon began with the introduction of credit cards in the 1950s. Our parents and grandparents lived by the axiom, “If I can’t afford to buy it outright, I don’t need it.”

The availability of credit cards changed our purchasing habits dramatically. Today, people use credit cards instead of cash, checks, or debit cards increasing the average credit card debt.

The availability of credit cards changed our purchasing habits dramatically. People claimed they were for use only in emergencies, but suddenly, everything seemed an emergency. Credit card debt mushroomed and continues to burden already stretched budgets. Today, people use credit cards instead of cash, checks, or debit cards that can be used like a credit card but deducts the money from your bank account.

Consequences of Overwhelming Credit Card Debt

In the pandemic-induced economic downturn, overwhelming credit card debt is forcing many into bankruptcy to wipe out those debts. Unemployment causes many to survive on a significantly lower income. Adding the burden of substantial credit card debt results in severe stress that may lead to many health issues, including heart problems, ulcers, depression, and anxiety, among others.  

Relying on Credit Cards Due to a Business you Can’t Afford?

It’s not unusual to experience mounting credit card debt when being faced with cash flow problems related to negative assets. A poor performing business or owning a rental property with a tenant that is not paying rent causes credit card debt to rise quickly.

Here’s Some Help If This is you:

“I tell everyone never to take more than a fifteen-year fixed-rate loan, and never have a payment of over 25 percent of your take-home pay. That is the most you should ever borrow.”

― Dave Ramsey

TV Personality, Financial Expert and Author

Alternative Solutions to Bankruptcy

Regardless of your circumstances, alternative debt solutions exist for getting relief from credit card debt. While bankruptcy seems the only solution for some, other methods involve:

Try these options first and only file bankruptcy as a last resort.

Avoid bankruptcy if at all possible due to credit card debt. If you are able to adjust your budget, continue to make your payments and avoid harm to your credit.

When to Consult a Debt Counselor

If you experience a drop in income, you can try to work directly with your creditors. A consolidation loan may help, but if you are not able to secure one, it’s time to consult and vet one or more debt management companies. The object is to eliminate your credit card debt and learn the best debt advice from a reputable source to avoid repeating the problem later.

Credit Yogi can Help

Credit Yogi offers free help fixing your credit score. We provide a free 800 number available 24/7, free credit repair templates and consultations with experts. Our experts have helped thousands of consumers since 1999.  Our network covers more than 30,000 zip codes. You will also find an abundance of “How to” content on several financial topics including credit repair on this site.

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