A survey released by Tamara Draut, vice president of policy and programs at Demos and co-author of The Plastic Safety Net: How Households are Coping in a Fragile Economy, revealed that 37 percent of low-income and middle-income households use their credit cards for basic living expenses such as housing, groceries and utilities on a regular basis.
Tamara Draut said: “Wages have stagnated while medical and housing costs have sky¬rocketed, and if confronted with a layoff or health emergency, there are few, if any, personal or public safety nets adequate enough to help in a crisis. Households are turning to high-cost credit cards to keep afloat.”
The average low-income and middle-income American who uses their credit card to pay for basic living expenses carries credit card debt totaling around $9,827. But those households who don’t use their credit cards for basic living expenses only have an average credit card balance of $7,995. That’s a huge difference. What many credit card consumers don’t realize is that credit card debt can quickly add up putting families at risk for default, lawsuits and wage garnishments . What’s surprising is that the survey also found that those families using credit cards to pay for basic living expenses mostly used income tax refunds and worked longer hours or took a second job to pay down debt. How many of them considered bankruptcy? The authors of the report did not ask; but it wouldn’t be surprising if only a few even knew that bankruptcy could help them discharge many of their debts and get a fresh financial start.
If you’re so financially strapped that you’re using credit cards to pay for food, utilities and other basics, it may be time to talk to a bankruptcy attorney.
(Consumer Bankruptcy News, Volume 19, Issue 17 pages 1 and 6)
More Celebrities File Bankruptcy
Many debtors are under the misconception that only the “poor” file for bankruptcy; but many celebrities are finding themselves overextended on credit cards and even facing foreclosure. Stephen Baldwin and his wife Kennya recently filed Chapter 11 bankruptcy with $2.3 million of debt. The bankruptcy petition also includes a home valued at $1.1 million that is underwater with two mortgages totaling $1.2 million. Also included n the bankruptcy:
*$750,000 in income taxes dating back to 1999
*$139,000 in unpaid withholding taxes
*State income taxes of $195,000 dating back to 2004.
*$70,000 in credit card debt.
Whether a debtor has many assets or few, bankruptcy can be a logical and practical solution to a situation that is often difficult to overcome. Even the rich are experiencing a rough time in this turbulent economy and turning to bankruptcy for relief is considered by many celebrities to be a smart move. “Ordinary” debtors facing maxed out credit cards, foreclosure and back taxes should consider all of their options including Chapter 7 bankruptcy and Chapter 13 bankruptcy.