6. Coping with a Credit Crisis

A credit crisis—being unable to manage your debts—can come on slowly as the result of overspending for many years. The balances on your accounts grow and grow; pretty soon you’re able to make only the minimum payments, and then not even that.

Other times a credit crisis comes at you in a rush as a result of another financial setback—a job loss, a divorce, a major illness. Suddenly, you have more “outgo” than “income,” and you’re not sure where to turn.

Or your crisis could be the result of larger financial turmoil. After years of encouraging people to borrow money, lenders began sharply cutting back their risk in 2008 as a result of the financial crisis. They raised rates, chopped lines of credit, and closed or ...

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