With the financial challenges and the consumer debt that has been acquired by Americans since 2008, the number of individuals filing for bankruptcy protection has also increased. Credit card debt -- some of which is unavoidable for many families -- is one of the main reasons that individuals find themselves struggling and then needing a fresh financial start.
With the holidays around the corner, consumer spending tends to increase as individuals want to share a generous spirit with others. However, there are some things that consumers can do in order to avoid starting the New Year with a mound of debt that is outside of their financial control.
As such, it has been recommended that people have a strict budget and don't vary from that when shopping and that people be very cautious when deciding to open a new credit card account in order to save extra money due to the high interest rates they generally charge.
Debt -- specifically credit card debt -- can cause significant problems if not paid on time or paid at all. Missed or late payments have the ability to affect your credit score. If an individual has a lower credit score, they may have a more difficult time obtaining financing for large purchases in the future or even higher interest rates. Also, if the debt becomes completely unmanageable, bankruptcy protection could become a viable option. Bankruptcy may be a necessary and helpful option.
Credit cards, while providing many benefits, can also cause problems that can create bigger issues for individuals down the road. Credit cards are a double edged sword. For example, if they are managed and paid on time it will help a credit score increase; but they can also destroy a credit score. Bankruptcy helps provide individuals with the fresh start necessary to rebuild a lower credit score.
Source: WWLP, "Avoiding credit card debt this holiday," Nicole Nalepa, Nov. 15, 2012