When I meet with a debtor who has expressed a desire to file bankruptcy, once of the first things I start discussing is their use of credit. Many times, their use of credit also turns to their relationship with credit. If you’re going to file bankruptcy, you need to stop using credit cards. That seems like a bit of a no-brainer. But recently, I had a conversation that went something like this:
“You cannot use credit cards any more,” I told my client. “You need to start operating on a cash basis.”
I saw my client thinking about this, and then after a momentary pause, I heard this reply:
“But how will I buy food?”
I wasn’t sure if my client was kidding. But it became clear to me that there was no joke. The question made it evident that the use of plastic over the years had replaced cold hard cash, as well as the significance of cold hard cash. The existence of cash – for my client – represents the ability to buy as many groceries as the money will buy. The lack of cash means no groceries. And this can pose a problem for someone who has not been using cash, but instead, been relying on the convenience of a plastic card.
I realize that some may read this and say “how the hell can someone think that they can buy things with money they do not have?” But the reality is, the overwhelming majority of people who have used credit to obtain food and other necessities have not done so out of some desire to defraud a lender. They did it because they needed food. They did it because they really believed that the money would be there to pay it. They did it because they did not know any better.
For most, and I think this is the case with my client, there is a complete disconnect between cash – which represents a finite amount of purchasing power depending on what’s in your pocket, and a plastic credit card which in many cases simply doesn’t. That disconnect can catch up with you. It’s caught up with my client. In addition to having to face a bankruptcy filing, my client needs to relearn how to use cash to meet her personal needs. She needs to relearn how to buy food.
And if this sounds like you, it’s time to take the next step.
Related posts:
- So You Think It’s a Good Time to Buy a House?
- You and Your Credit Card Terms: What You Don’t Know may Bite the Ones You Love.
- Just In Time For The Holidays
- The Secret History of Credit Cards
- Facing Bankruptcy with Nagging Regret
Tags: Credit and Debt, credit card, debt, Economy, Yep. We're in trouble.