During difficult economic times, downturn, some Milwaukee residents may turn to credit cards as part of their fiscal survival strategy. On the plus side, a majority of people are making their credit card payments on time; just over two percent of people were more than 30 days late on their payments in the first quarter of this year. On the other hand, the Federal Reserve reports that outstanding credit card balances in the United States clocks in at more than $850 billion.

In response to the amount of credit card debt built up in recent years, some individuals are pulling money out of their retirement accounts to pay down account balances. Financial guru Suze Orman, featured on CNBC, advises consumers that this is one of the biggest financial mistakes that they can make.

Orman goes so far as to advise people that filing for bankruptcy to deal with seemingly unmanageable credit card debt is preferable to using hard-earned and vital retirement money to deal with the issue or problem. Paying a large amount of taxes for funds that would have been protected from bankruptcy proceedings and may not be enough to pay down debt simply doesn’t compute.

A personal bankruptcy attorney may be able to aid consumers in dealing with credit card debt, and creditors generally, by filing either a Chapter 7 or Chapter 13 bankruptcy. A Chapter 7 bankruptcy permits a liquidation of certain debts while a Chapter 13 bankruptcy results in the creation of a payment plan to satisfy most obligations to creditors. In either case, retirement fund and accounts are protected.

Source: CNBC, “Suze Orman: Don’t put your retirement on a credit card“, Sakina Spruell, August 07, 2013