Bankruptcy filings have increased more than 500% since the early ‘80s, and well over 1 million people now file each year.  Interestingly enough, the dramatic rise in the “popularity” of bankruptcy has coincided with our increased societal reliance on credit cards.

In this edition of our "Ask the Experts" series, we check-in with authorities in the fields of business and consumer psychology in order to gain a better understanding of avoidable post-recession overleveraging.

Debt is unquestionably a double-edged sword. Leveraging it can enable you to purchase a home or secure an education far earlier than you would be able to if full payment was required up front. But habitual overleveraging and other types of irresponsible borrowing can prove disastrous to both your credit standing and bottom line if you aren’t careful.

“Credit cards are useful tools for short-term cash management,” says John Chung, a professor at the Roger Williams University School of Law who studies the relationship between consumer debt and bankruptcy.  “The problems emerge when people view credit cards as a means to fund a lifestyle and/or use them as long-term sources of cash.  Too many people confuse credit cards with actual cash.”

When you’re neck-deep in credit card debt and have no way to pay, it’s easy to assume that you’re out of options.  That’s not necessarily the case, however.  While much depends on the amount you owe and how many days past due your account is, there are a few different strategies that you might want to pursue – including debt settlement.

The past few months have been busy for the new Consumer Financial Protection Bureau (CFPB).  After announcing plans to monitor the credit bureaus, helping to levy punishments against a number of major banks for deceptive credit card marketing, and setting up a helpful consumer complaint database, the CFPB last month announced a controversial rule change that stands to make it easier for stay-at-home spouses to build credit and published a rule giving itself federal oversight over the country’s biggest debt collection companies.

Credit card mega-issuer JP Morgan Chase & Co. has recently come under fire due to allegations of impropriety relating to the company’s debt collection practices. Numerous whistleblowers, including former high-ranking Chase executives, have told American Banker that the company engaged in reckless and even fraudulent practices in order to overstate past-due debt and thereby boost revenue. Chase made $1.8 billion off overdue debt in 2009 alone, according to the publication.

What is a charge-off?

A charge-off is when a bank writes delinquent debt off its books. The term can be used in conjunction with various types of debt, such as that originating from a credit card, mortgage, auto loan, etc.

The recently released Federal Reserve G.19 Report has sparked a flurry of news stories proclaiming that consumer credit card debt is on the rise for the first time in 27 months. Such news has been met with surprise over the fact that debt levels would begin to worsen so soon after the country emerged from the Great Recession and prognostication about exactly what this trend signifies. However, a closer look at America’s credit card debt over the supposed 27-month stagnant period shows that this is, in fact, not the first time consumer credit card debt has risen since 2008.

On December 15, 2010, 11 non-profit debt settlement agencies filed a joint complaint with the Federal Trade Commission (FTC), alleging that certain for-profit “debt settlement companies … have brazenly evaded” FTC rules governing debt management agreements established over the phone, according to a press release.

Many disingenuous debt settlement companies have started texting consumers in order to gain entry into their lives and ultimately take advantage of their debt situations.