August 11th, 2009 by Reed Allmand 
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.
About Reed Allmand
Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."
View all posts by Reed AllmandSubscribe
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