Credit Cards and Bankruptcy

Credit Cards and Bankruptcy

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From debtconsolidation-us.org – The use of credit card is increasing day by day. These credit cards are considered very useful as they facilitate the consumer in a number of ways. They let the consumer buy household commodities and many other expensive items, which are subject to a certain credit limit. The consumer can accumulate reward points, which may be redeemed to get a discount on certain items. These points can also be redeemed for gift cards. Credit cards are accepted globally, thus solving the problem of carrying cash. These cards have taken the place of paper money in the wallets of many people. No one now needs to carry cash or different currencies while traveling when these cards are here for you. The consumer can enjoy the advantage of having a credit card as long as they can pay for the monthly charges of the card. However, what if someone is unable to do so?

The Dark Side of Credit Cards

Credits cards have a charm as many see them as an easy source of buying things and do not think of the consequences if they fail to pay the minimum monthly payment. Despite the usefulness of the card, its wrong use can seriously hurt your financial life. The use of the card requires you to pay a certain minimum amount every month. If you are carelessly using your card and have not thought of the payment that has to be made at the end of the month, you are definitely in trouble and your debt will increase. This situation will get worse if you start missing out your payments every month for any reason. You will be charged a late fee every time you fail to pay the credit card payment. Eventually, you would accumulate a large debt, mainly because of the late fee, and your credit score will definitely fall. A low credit score will not let you borrow any more money in future. As years pass on, the debt will keep increasing till you are in the state of bankruptcy.

Bankruptcy

Believe me, this is not a state you would want yourself to get into. It is a legal status of a person who is unable to repay his debts. The bankruptcy process can help you pay some or all of the debts in some cases. The methods used will be liquidation or reorganization. Through the liquidation process, all your property will be taken and will be considered a payment for some of the debt. In the reorganization process, you will have to propose a plan to pay back the money in a specific period of time. Both these methods may help you pay your debt, but all this will affect your life badly.

Credit cards by itself are not bad and neither are the measures to collect the payment. The benefits that a credit card provides cannot be denied, but you have to be careful of when and on what you use your credit card for since the wrong use of this card can increase your chance of going bankrupt.