One of the most serious
credit problems for many Americans today is how easy it can be to get a credit
card. It is not unusual for one person to have five or more cards.
Unfortunately, too many people run up unpaid balances of $10,000 to $50,000 or
more. Eventually, they find their financial situation is out of control and they
file bankruptcy.
Since 1995, bankruptcies have risen from about 800,000 to over 1.2 million by the end of 1998. Unfortunately, many people believe bankruptcy is the easy answer to what seems like an uncontrollable financial problem. However, bankruptcy has serious consequences. If you file bankruptcy, don't expect to get a mortgage, loan, or credit card anytime soon.
You may also find it difficult to rent an apartment, to get a better job, or to open a simple checking account. Employers, property management companies, financial institutions, and many other types of organizations regularly check credit reports and it's totally legal.
It is also important to remember that declaring bankruptcy can be a major obstacle to your eventual financial recovery. In most cases, bankruptcy is on your credit report for 10 years. Worse yet, it is a court action that can remain on the public record indefinitely.
The easiest way to avoid bankruptcy is to use common sense and know your debt limit. That's the amount of debt you can carry without feeling financial pressure. If your debt-to-income ratio exceeds 40%, you may be in trouble. If you have a large amount of debt, do everything you can to stay current. If you don't think you can make it, call the Credit Union. We can help!