Are you are living on credit cards? If so, it’s probably just a matter of time before you destroy your credit and file bankruptcy. As you know, I have been a Los Angeles bankruptcy lawyer for about 35 years. I have provided credit counseling in Los Angeles to hundreds of clients who have been living on credit cards.
Many of the clients who come to me for credit counseling have resorted to living on credit cards. That’s because they have no other means of support. If you live paycheck to paycheck, you simply don’t have the financial reserves to get through a rough patch. Unemployment is the usual reason people fall back on their credit cards.
If you have insufficient savings, what would you do if you have to pay your rent tomorrow? You would probably use a credit card. Nearly half of American households don’t save any of their money.
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You would probably use a credit card to pay for groceries. And car insurance. And your car payment. And of course, you would use the available credit on one credit card to make your payments on the other credit cards.
The end result is a big pile of debt. Suppose you find a new job. Unless it pays a lot more than your old job, you won’t have extra money to pay debts. Those debts just grow and grow. The interest on credit cards is a financial killer.
The bankruptcy laws were adopted to bring debt relief to individuals who are honest but unfortunate. Credit card debts incurred under honest circumstances are dischargeable in bankruptcy. There is nothing wrong with letting the law work for you. If you are eligible for bankruptcy, then at least consider it.
The usual complaint about filing bankruptcy is from folks who still have a high credit score. They are proud of maintaining a high score. They don’t want to lose that. But they really don’t have the credit they think they have. If they have high load of debt, their high credit score is meaningless. The high score won’t get them any new sources of credit. No bank will loan you money when you are in debt up to your eyeballs. The high credit score means you are paying lots of interest. But you are not getting anywhere.
Living on credit cards has to end. Eventually, you will run out of credit.
If the old approach to managing your money doesn’t work, then try something new. We provide absolutely free credit counseling to individuals in the Los Angeles area. We will not recommend filing bankruptcy unless you need it. If you have any non bankruptcy alternatives, we will tell you what they are.