Credit cards are closely tied to bankruptcy cases. In fact, the United States recently surpassed $1 trillion in cumulative credit card debt. This all-time high indicates that Americans are using credit cards more than ever, and many may be struggling with outstanding debt they cannot repay.
Additionally, credit cards often come with very high interest rates, which can trap people in a vicious cycle of debt. Even when they make their minimum payments each month, their overall debt continues to grow due to compounding interest. As a result, many individuals file for bankruptcy, citing overwhelming credit card debt as a primary reason. Others avoid using credit cards to prevent falling into similar financial difficulties.
The positive side of credit cards
For those who file for bankruptcy, credit cards can also become an essential tool for rebuilding credit. After filing, getting a credit card may be one of the most positive steps a person can take.
A bankruptcy filing lowers your credit score, making it more difficult to obtain loans or financial opportunities. But using secured credit cards — which require a deposit as collateral — can help rebuild credit over time. Since secured cards pose no risk to lenders, they provide a way to demonstrate responsible credit use. By making small purchases and paying off the balance in full each month, individuals can gradually repair their credit scores and improve their financial standing.
The bankruptcy process
This highlights some of the complexities of bankruptcy. If you are considering filing, it’s important to fully understand all of the steps involved. Having legal guidance can help you successfully navigate the process