Study: You do not have to be bad with money to succumb to credit card debt
While credit card debt is certainly a challenging dilemma, many individuals, if asked, would also maintain that it is a dilemma caused by circumstances outside their control - an assertion that is now backed by recent research. Indeed, according to a new study conducted by Demos, a public policy think tank, even frugal individuals may end up with high credit card bills due to unexpected hardships, such as the loss of employment or unforeseen medical expenses.
Interestingly, the study also noted that, contrary to popular belief, there simply is little evidence to support the claim that those with credit card debt have irresponsible spending habits when compared to those with no debt. In fact, in many situations, those with accumulated credit card debt actually spend less than their debt-free counterparts.
Common causes of credit card debt
Although the recent study explored several potential reasons for the accumulation of credit card debt, two significant explanations proffered were unemployment and medical issues.
For instance, perhaps unsurprisingly, the study found that credit card debt was 14 percent more likely in households where someone had been unemployed for at least two months. Furthermore, of the households surveyed, more than 60 percent of those with credit card debt claimed out-of-pocket medical expenses contributed to it.
Sadly, these findings merely bolster the unfortunate reality that, during times of greatest need, many individuals come to rely upon credits cards by necessity and not by choice.
Dealing with credit card debt through bankruptcy
Thankfully, bankruptcy can often provide relief for Georgians buried under credit card debt. For example, Chapter 7 bankruptcy typically permits individuals to discharge unsecured credit card debt - meaning the debt may be eliminated.
However, if an individual is considering bankruptcy as a way to dig out from under credit card debt, he or she should be wary of using cards for several months before filing bankruptcy. For example, under the bankruptcy code, if an individual purchases luxury goods or obtains significant cash advances during the time leading up to a bankruptcy filing, the court may determine that the debt is nondischargeable.
Additionally, a credit card company may argue that card transactions completed shortly before bankruptcy were made without the intent to ever pay them back, in which case the debt may also be nondischargeable. Accordingly, it is often best to avoid any dispute by simply not using credit cards during this period.
If you have any questions regarding the dischargeability of credit card debt through bankruptcy, it is best to consult with a knowledgeable bankruptcy attorney. An experienced attorney can fully explain your options as well as help ensure you get the fresh financial start you are entitled to under the law.