As savings dry up, many begin to rely upon credit cards

Given the harsh economic reality facing people today, it is easy for almost anyone to fall upon hard financial times. Indeed, for the countless individuals living paycheck to paycheck in Georgia, even a single unforeseen circumstance - such as a medical emergency of the loss of a job - can lead to dire financial straits.

Regrettably, many people turn to credit cards when they find themselves, at no fault of their own, struggling with unexpected debt. And, while many of these individuals feel they have no choice but to use credit cards to make ends meet, the practice nevertheless creates additional burdens as it often contributes to their mounting debt.

If fact, a recent survey conducted by Bankrate.com demonstrates how dependent Americans have become on credit cards, particularly when they do not have significant savings. According to the survey, only 51 percent of individuals have sufficient funds available in emergency accounts to cover their credit card debt should they elect to pay it off. Sadly, this particular finding is less surprising when you consider that the savings rate in the U.S. dropped to just 4.2 percent last November, according to the U.S. Department of Commerce - making it one of the lowest rates since 2007.

Unfortunately, the lack of saving - or, for many, the lack of the ability to save due to uncontrollable economic pressures - illustrates just how quickly a person can succumb to credit card reliance as a result of financial troubles.

Bankruptcy and its ability to help with credit card debt

Luckily, those buried under significant credit card debt in Georgia may be able to discharge, and thus eliminate, unsecured credit card debt through a Chapter 7 bankruptcy. However, while a bankruptcy typically can wipe out considerable credit card debt, individuals should be aware of certain limitations, especially when they incur credit card charges in the months leading up to the bankruptcy filing.

For instance, it is commonly advisable not to use credit cards for several months before filing bankruptcy as a credit card company can attempt to stop the discharge of this debt by alleging the person made the charges fraudulently and never intended to pay. Although, in Georgia, a credit card company alleging fraud must first prove that the person used his or her card without the actual and subjective intent to pay, which can be a high burden to meet.

However, a credit card company can also object to a discharge by claiming the debt was incurred under false pretenses or representations. Interestingly, though, bankruptcy courts in Georgia typically follow the "assumption of risk" approach with claims such as these. Essentially, this means that a credit card company assumes the risk of non-payment unless it clearly and unequivocally revokes the person's right to use the card. The failure to make such a revocation will likely result in the discharge of the debt through bankruptcy.

It is also important to note that the bankruptcy code does outline certain circumstances in which credit card debt will be presumed to be nondischargeable, regardless of whether the card owner intends to pay. This includes situations in which the person accrues more than $650 in credit card debt on "luxury goods or services" within 90 days of filing bankruptcy or when the individual obtains cash advances of more than $925 within 70 days of filing bankruptcy.

Ultimately, given the complexity of Georgia law surrounding the dischargeability of credit card debt, it is often best to seek the counsel of an experienced attorney if considering bankruptcy as a way to get out from under a mountain of bills.