Today, the average American household has more than $20,000 in credit card debt. What's frightening is, the average American household only makes $41,000 a year. Currently, credit card interest ranges from 18 to 26% and just looking at these numbers it is easy to see that most of these average folks will never be able to pay these debts off. Prior to the 2008 financial crisis, credit card companies were pushing money into American's hands at alarming rates. At one point, people used to joke that it was so easy to get credit that they could get their dog a credit card. Although this is a stretch, there is some truth to it. Credit card companies were irresponsible on giving credit to people that could not afford it. Many of these creditors offered teaser rates to get people to sign up and sell their soul. Now, a few years down the road they are robbing Peter to pay Paul.
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In today's economy it sometimes makes more sense for a debtor to cut their losses and start building a new beginning. Filing bankruptcy might just be the perfect solution to do this. For individuals that have large amounts of unsecured debt like the average folks we just spoke about, Chapter 7 bankruptcy is king. Filing Chapter 7 bankruptcy will wipe out all of the unsecured debts, including credit cards, medical bills, personal loans and payday loans. This will wipe the slate clean and allow the debtor to completely start over while trying not to make the same financial mistakes again. When a person spends everything they have to pay the minimum payments on their credit cards and only allows them enough to pay rent and minimal amounts of food, filing bankruptcy should be strongly considered.
One bankruptcy attorney stated any easy way for a debtor in this situation to see if filing bankruptcy should be in their future was to add up all the credit card bills and figure out if the individual stopped charging how long would it take to pay those debts off based on the current amount of income the debtor has. If it takes longer than 5 to 6 years the individual should seriously consider filing for bankruptcy.
For many, debt can be crippling and can even cause physical ailments because of the stress incurred. Being buried under debt can also destroy marriages. When faced with problems like this, it's best to be realistic and speak with a bankruptcy attorney immediately. Sometimes, good hard working people bury their head in the sand and continue on with the money in, money out lifestyle. This kind of life will never allow the debtor the freedom of getting their finances under control. All it will take is one small crisis and the wheels will fall off. Filing for bankruptcy was created to give people a second chance at their finances. If it wasn't for bankruptcy, capitalism would not work because entrepreneurs would not take any unnecessary risks to bring their products to market. Filing bankruptcy is now a necessary integral part of the legal system that allows debtors to make mistakes without them being permanent.
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