Are credit cards and consumer loan debt making more bankruptcies inevitable?

Continuing our break from discussing the tax effects of foreclosures, I would like to share a significant story that was reported on Tuesday, May 8, 2012 on page A9 of the Tacoma News Tribune. According to the story, Americans are back at it again—increasing their use of consumer debt. This is the biggest one month increase in a decade, since 2001.

According to the article, consumer debt rose by $21.4 billion in March from February, the seventh straight monthly increase and the largest since November 2001. Auto and student loans also increased by $16.2 billion, according to the article. A gauge of credit card debt rose $5.2 billion after declining in January and February 2012. One ray of sunshine in the report is that total “only” borrowing rose to a seasonally adjusted $2.54 trillion, which is below the all-time high of $2.58 trillion reached in July 2008.

What does this mean? Overall consumer borrowing declined by only $40,000,000,000 over 10 years. There is still an awful lot of debt still out there. I think that bankruptcies are almost certain to increase again, particularly as most markets have plenty of people discouraged about sagging or deflating housing prices.

My advice to you is that if you cannot see yourself being “debt free” of all consumer debt (car payments, credit cards, student loans, and tax debts) within 36 months, then you should consult with a qualified bankruptcy lawyer to see if a Chapter 7 or Chapter 13 bankruptcy filing might be the best option to get your financial life back on track.