Credit debt is an unsecured debt that increases very quickly due to interest rates and other penalties that apply when you miss a payment. Interest rates are high due to the large demand of money on the market today and due to the inflation. If the demand is big, creditors can apply high interest rates and still give away all the money they have in funds, but now they can expect to gain more. If the inflation is high, creditors are forced to increase interest rates so that they get the same purchase power back, even if that means more money. Seeing as both this factors gone wild in past years, credit card loans easily got out of control and turned into debt.
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You may think that once in this situation your only way out is bankruptcy. That is false because there are several debt relief options available like debt consolidation or debt settlement that can help you clear your debt. Bankruptcy is actually the worse option of the three, and should be your last option to eliminate debt.
Filing for bankruptcy is a process that is a legal way to eliminate debt by declaring yourself unable to pay. The good thing is that you clear all your debt, but there are several bad things about it. Firstly, you will have to hire a lawyer, this can be quite expensive, but legal representation is required for you to declare yourself bankrupt. The process takes somewhere around a year, but there are cases that can go for 7-8 years. Keep that in mind, because even if it takes one year, that will be a very stressful year and you will have to spend a lot of time in court. At the end of this period you will still be left with a low credit score. This means that even if you want to take another loan in the future when you might need some money, no creditor will grant you this loan because they fear that you will not pay it back.
Bankruptcy should only be used as a last resort for when you don't have any other choice, but first try one of debt relief options available.
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