Credit Cards are Sure Way to Bankruptcy?

By: Juana D.Wilson

Have you heard about bankruptcy and do you know what it means to file for it? Yes, to go bankrupt sounds awful but in fact a great number of people announce themselves bankrupts every year and no one has found it impossible to recover from it so far.

Well now, there are many reasons you can go bankrupt but all of them boil down to the same thing - bad spending habits and improper money management. And it becomes all the more easy today to display bad spending with credit cards.

Credit cards give you boundless freedom to spend but it is only a seeming permission. Your creditors invite you with attractive initial rates, keep you with generous rewards and have you spending more and more in chase of these rewards.

You find it irresistible to keep from pulling out your plastic monster each time you drop in at a nearest fast food even if it is a simple cup of coffee. In the end you get into deep financial trouble and bankruptcy is often the result.

Cardholders' opinions on the bankruptcy matter very often polar. Some think it is the end of the world, others find it a perfect way to avoid financial obligations connected with credit card debt. While the second issue is under consideration of the Bankruptcy Law, the fist one is perfectly clear. It is NOT the end of the world and there are points proving that.

People think that they will lose everything as the government will sell all their property and they will have to start a new life with almost nothing to begin with. Calm down. It is not quite so. Certain kinds of assets like your house, a car, money in retirement plan and your clothing are protected by the law of every state and most people passing through bankruptcy keep everything they have.

People think everyone will know about their complete insolvency and their reputation will be killed. Don't worry. If you just an ordinary citizen, do not work in a major company and is not connected with the media somehow, your bankruptcy will be known only to your creditors and relatives.

There is an opinion that if you are married, you have to file for bankruptcy together with your spouse who is actually at fault. Not necessary. If you have separate accounts, you are liable only for your own debts. However it often happens that the partners both have their names on the account and in this case they file together.

Many are afraid that they will lose eligibility for a new credit in the future. But their fears are not grounded. Credit card companies, especially those that offer credit cards with no or bad credit history will be glad to have you as a client. Of course, it is more profitable for creditors as they charge you higher interest rates but on the other hand you get a perfect chance to re-build your damaged credit history, provided you display strong discipline and pay all your credit card bills duly.

Some bankrupts think that the filing itself will improve their credit rating as it will wipe out all the debts. It is completely wrong. First of all, some types of debts cannot be discharged. We speak here about child support, government-issued student loans and debt which are the result of fraud. Second, bankruptcy is the worst record in your credit report and it affects your creditworthiness and credit file for as long as 10 years.

But for the last point, everything speaks for the fact that bankruptcy can be easily faced, though really unpleasant it is. It is not an advertisement of bankruptcy but you should know that is isn't so awful as it is spoken of and you should go and file for it if the situation demands that.

Sometimes, cardholders who are really in serious debt, avoid doing it and the debt spiral leads them to suicide. Get the truth about bankruptcy and use it to save your finances and reputation.

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