Judge John Ninfo Shares his Expertise

Bankruptcy judge John Ninfo has seen countless bankruptcy cases presented before him - more than he would like to see. Now, he is sharing some of his professional insight in an effort to advise people how to avoid crushing debt and bankruptcy:

Over the 19 years that I have served as a bankruptcy judge, it has become clear to me that most consumer bankruptcies are caused by excessive credit card debt. Here are some additional points we stress about credit cards in the Credit Abuse Resistance Education Program:

• If you lose your job and already have balances on credit cards, you should not use credit cards to get by. You need to cut expenses and find other income. If you couldn’t pay off your credit cards with your prior job, how are you going to pay off your old debt and the new debt you incur while unemployed — or if your new job is at the same or a lower salary?

• If you don’t pay off your entire balance, don’t use your credit card again until you have — otherwise you will likely fall deeper into a debt hole that you may never get out of. Bankrupts with significant credit card debt don’t have a history of incurring a balance, paying it off and recharging. Their history is ever-increasing debt on more and more cards.

• If you have more than one credit card, and are carrying balances on one or more of them, you are living above your means. You should ask yourself, can I pay my debts and ongoing living expenses with just my disposable income? If you need to go into more and more debt to stay afloat, you are drowning in debt.

• Carrying balances on store charges is no different than on credit cards. It means that you are directly or indirectly living above your means. You are not buying only what you can afford.

• It makes sense to have more than one credit card only in order to get rewards or cash back — and if you are paying the balances off every month.

• Bankrupts say credit cards are easy to go into debt with, since nobody supervises your use of them. Credit card companies, as nice as they may be when offering you a card, can be very aggressive and difficult to work with when you fail to pay them.

• New credit card disclosures show how much you will pay and for how long you will pay, if you only make the minimum payment and don’t charge anything else. This information will make it difficult for anyone in the future to justify or explain having more than one credit card if you are carrying balances.

• In the 1950s and ’60s, when there were no credit cards, people had no choice but to live within their means, and they had the same experiences of divorce, medical problems, job losses and children getting into trouble. They maintained savings for those kinds of setbacks. That still works.

• If you only have one credit card, it is easy to review your monthly statement carefully and analyze what you are spending your money on — needs, wants, wishes, luxuries or conveniences. That way you can make good choices about your spending.

• Even if you have only one credit card and pay the balance off every month, studies show if you use cash more, you will spend less. You will make different and better spending choices.

• Credit cards may be useful for true emergencies, but replacing a 30-year-old roof or repairing an 8-year-old car are not emergencies. They are expenses you should anticipate and save for.

Source: www.mpnnow.com