Chicago Bankruptcy Attorneys See More Americans Paying Credit Cards Instead of Mortgage
Somehow our priorities got switched around during the Great Recession. Homeowners who used to prioritize paying their mortgage above all else are now opting to use that money to pay their credit card bills, Chicago bankruptcy attorneys say.
In a way, it's a strategy that makes sense. One-quarter of American homeowners are underwater - meaning they owe more on their house than it's now worth. Consequently, they're wary of putting money into a home with no equity because doing so feels futile. Credit cards, on the other hand, seem to pay off. We can use plastic to buy necessities like groceries, gas, and clothes. And for those of us who have lost our paycheck or just aren't bringing home enough money, credit cards enable us to cover what we can't afford with cash (while our debt grow in the meantime).
But just because one solution seems easiest doesn't mean it's the smartest - or that there isn't a better strategy out there. There are consequences whether you choose to default on your mortgage or your credit.
Part of the problem might be that we're in denial about foreclosure. While your creditor would close your account right away if you stopped paying, your bank might not foreclose for six months, a year or more. You might fool yourself into thinking you've escaped - but you haven't. It's only a matter of time.
The perfect solution would be to rely less on your credit card. With less on your bill each month, you'll have more money to put towards your mortgage. You might still be underwater, but remember - a roof over your head (a roof that you own, nonetheless) counts for something. Of course, you'll still have that credit card debt to tackle when you get things under control.
That said, people aren't perfect - and our solutions often aren't, either. You just have to do the best you can. Bankruptcy is often the most realistic solution for dealing with debt. Specifically, Chapter 13 bankruptcy has the potential to stop foreclosure while you come up with a more affordable payment plan for your house. Chapter 7, on the other hand, can reduce or eliminate unsecured debts like credit cards.
No two financial situations are alike. To find out if there's a bankruptcy plan right for your problems, sign up for a free personal debt analysis with a Chicago bankruptcy attorney. Because sometimes your biggest priority should admitting when you could use a little help.