Study finds credit card debt often due to basic living expenses

There is a notion that some people have that credit card debt is the result of irresponsible spending on frivolous items that they don't need. As most people who have accumulated a large amount of credit card debt know, this is not always the case. In fact, according to a report from Demos, a think tank, the opposite is true. Individuals turn to credit cards to get by when things beyond their control, such as health issues or the loss of a job, occur.

In addition to looking at situations in which credit card debt is accrued, the study also focused on what the individuals with credit card debt spent their money on. Rather than entertainment and meals in restaurants, those experiencing financial difficulties focused spending on necessities needed to get by.

Perhaps unsurprisingly, the study uncovered a correlation between credit card debt and medical issues. While some readers may be quick to equate that with not having medical insurance, as it turns out that is not always the case. The study determined that even households where residents have health insurance accumulate credit card debt. According to the study, out-of-pocket medical expenses are to blame.

Job loss is also a reason that consumers carry credit card debt. Over the course of the last three years, individuals who experienced joblessness for a minimum of two months, were found to be 14 percent more likely to have credit card debt as compared to those who avoided an extended layoff. Also worth noting is that in close to 40 percent of the time, individuals residing in those households were working part-time jobs, unable to secure fulltime work.

Whatever the reason for the credit card debt, at times it becomes too overwhelming to handle. In these situations it may be worthwhile to explore filing for bankruptcy under Chapter 7 or Chapter 13. The best place to start is with a bankruptcy lawyer.

Source: ThinkProgress.org, "No, People Don't Get Buried In Credit Card Debt Because They're Bad With Money," Bryce Covert, May 10, 2014

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