Two currents have merged recently in my thinking about family financial health: the increasingly one sided nature of the credit card business and the consumer-hostile changes to the bankruptcy laws to become effective in October. The resulting whirlpool surprised me.

For all of their warm and fuzzy p.r., credit card companies want their cards holders to remain indebted to them. The minimum payments are calculated to retire the debt in between 25 and 40 years. An rapidly increasing share of card issuers' revenue comes from penalties and late charges. The card terms can change at the whim of the issuer, and a late payment to one card holder can result in a monstrous jump in the interest rate on a card on which there has never been a default. In short, it is a game rigged against the consumer. More Whether you characterize credit as an addiction or a modern form of economic slavery, the picture is the same. The consumer seldom escapes.

Bankruptcy once was the counterweight to the unregulated consumer credit industry. If all else failed, the beleagured consumer could unilaterally discharge his debts in bankruptcy. No longer. Changes to the bankruptcy laws coming in October will create new barriers to debt relief through the courts. Those caught in debt, whether by ill health, job loss, divorce or poor judgment, will find themselves either turned aside at the door of the bankruptcy court or granted less relief at a far higher cost.

All of this while the savings rate for consumers is dangerously low and retirement is more and more the responsibility of the individual rather than the employer or the government. Families exist on a financial knife's edge while making minimum payments on overwhelming debt at the expense of their financial future.

Which is why I challenge readers to look hard at their current debt load when contrasted to their cash reserves and their retirement savings, and ask if NOW isn't the time to take the dramatic step of discharging their credit card debt in bankruptcy, and restructuring their financial lives to become more self sufficient.

Elizabeth Warren's book, All Your Worth, presents pragmatic steps to family financial balance; a corner stone of that plan is to eliminate credit card debt. Plastic credit can be an addiction, and a screen to block out hard financial realities, which are no less real because they are hard. The desire to repay your debts does not translate into a realistic ability to do so. Even if you can do so, at what cost to other essential matters?

Throughout my 26 year career as a bankruptcy lawyer I have been reluctant to urge people to file bankruptcy. Bankruptcy has been a last resort in my view, a welcome and powerful resort for those for whom there were no realistic options. Now, I am championing a more aggressive position: ask yourself if you would not be better off if you shed the credit card debt through bankruptcy and put those minimum payments to use for you and your family each month rather than for MBNA and Discover.

A university study done in the late 90's found that one out of seven American families would be better off if they filed bankruptcy. Given the expansion of consumer credit and the weakening wage structure in the intervening years, I can't imagine that those numbers are not still valid.

Look at your saving account statement next time you pay your bills and think about it.

Considering bankruptcy

Life after bankruptcy