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Credit Vs Debt Debacle Deteriorates With Worst Crisis Ever – BAPCPA 2005

Are credit vs debt protection laws, statutory major intents, and judicial elements adhered to?

What is the relationship of credit vs debt? Do you know the difference between how much you owe (debt) and how much you can borrow (credit)?

ThExtraordinariOnly unending credit vs debt fiasco
The difference between credit and debt is essentially a story of “before” and “after.” 

You know the most famous difference in comparing credit vs debt. Credit is the ability to borrow money, while debt is the result of borrowing money.

Want to regain control of your financial situation? A credit and debt counseling service can help you understand and solve financial woes.

Definitions comparing credit vs debt

The ability to borrow money is credit, while debt is the result of borrowing money (Pocket Sense). Traditionally, credits (deposits) appear on the right-hand side of a checking account register, and debits (money spent) appear on the left.

A creditor is worse than a slave-owner; for the master owns only your person, but a creditor owns your dignity, and can command it.

— Victor Hugo

You create debt by use of credit. A common misconception is that paying off your debt instantly increases your credit score. When you do not manage your debt well, a debt management plan improves your money management skills, increases your financial awareness, and modifies your financial habits.

Now that we have the credit vs debt debacle cleared, let’s dive in further.


According to Merriam-Webster dictionary, the meaning of DEBT is something owed: obligation.

Debt is something, usually money, borrowed by one party from another (Investopedia).

Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor (Wikipedia).

How do you define credit?

  1. Credit is a contract agreement in which a borrower receives a sum of money or something of value and repays the lender at a later date, generally with interest.
  2. An agreement between a lender and a borrower is credit (Investopedia).
  3. Credit, to an accountant is a bookkeeping entry that either decreases assets or increases liabilities and equity on a company’s balance sheet.
What is the difference between credit vs debt
A lady holding her credit card ready to shop online

Banks issue credit cards, the most common form of buying on credit today. These cards repay merchants in full and extend credit to buyers, who repay the bank over time. As a result credit card debt refers accrues due to the accumulated outstanding balances that many borrowers carry over from month to month.

Visa’s Zero Liability policy covers all Visa credit – and debit-card transactions processed over the Visa network. Visa extends the same protections and benefits to its debit cards as it does to credit cards. It includes the ability for credit-card issuers to resolve merchant disputes on the cardholder’s behalf if goods were defective or weren’t received, you were overcharged, or for other reasons.

— Dave Ramsey

Top 5 quotes on managing credit vs debt wisely

The minute a Wall Street firm purchases your debt, your bank no longer has it on its financial statement, which then allows the bank to look for more credit card customers. That’s one reason why you get so many credit card offers.
– Robert Kiyosaki


When you take a look at the problems our country is facing, debt is No. 1. The math is downright scary and the credit markets aren’t going to keep on giving us cheap rates.
If you fail to pay your minimums for any debt on time, your credit score will take a major hit and you run the risk of seeing the interest rate on all of your cards go up.
— Alexa Von Tobel


High bankruptcy rates, increased credit card debt, and identity theft make it imperative that all of us take an active role in providing financial and economic education during all stages of one’s life.
— Ruben Hinojosa


Bad debt is debt that makes you poorer. I count the mortgage on my home as bad debt, because I’m the one paying on it. Other forms of bad debt are car payments, credit card balances, or other consumer loans.
– Robert Kiyosaki


Bankruptcy Law Protection

Did you know that bankruptcy laws protect both the creditor and the debtor? How does it pertain to the credit vs debt relationship?

According to Pittaluga (2000), the bankruptcy law protects borrowers by permitting brief reprieve from the actions of its creditors, whether the debtor is an individual, cooperation or partnership.

what is credit v debt investing
A gentleman using a calculator to sum his total debt

The major intent of the law is protecting the best interests of creditors (e.g. returning property rights to them, dispersing monies recovered from the sale of a debtor’s possessions upon default) and debtors (e.g. compensating them for services not received and/or damages).

I love, love, love that you want to use your debit card. But to keep your credit score solid, you still need to keep a few credit cards and use them at least once every few months.

— Suze Orman

Creditor’s stay

As demonstrated in Section 362a of the law where the automatic stay or injunction acts of or by creditors are in force, the creditor is allowed to act in several ways.

Creditors may either commence or continue with judicial or administrative proceedings against the debtor, or enforce a judgment contained.  They can obtain possession of control of debtors’ property or create, perfect and enforce a lien against debtor’s property.

If you don’t have the money management skills yet, using a debit card will ensure you don’t overspend and rack up debt on a credit card.

— T. Harv Eker

See the different credit vs debt application of the law?

Read further here:  Automatic stay

The Creditors Hand

The difference between credit and debt is essentially a story of "before" and "after."
A young man fighting substance abuse, mental health complications, and homelessness

Alternatively, creditors can collect or recover a claim against the debtor; set off any debt owing to a debtor; criminal proceedings against the debtor; and commence or continue an action for the collection of alimony, maintenance, or support.

A condition that allows modification, termination or annulment of the automatic stay provision is for the bankruptcy petitions filed in bad faith.

If you have a debt issue or credit card issue, start dealing with it. If you have a tax issue, don’t just say, ‘I’m not going to file.’ There are ways to deal with these things, but you must communicate with your creditors, whether it’s a credit card company or tax department.

– Hill Harper

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was passed by Congress and signed into law by President Bush in April 2005. It tightened eligibility requirements and made it difficult to file for liquidation under Chapter 7 bankruptcy.

This bankruptcy reform law gives people a second chance. It is unfortunate that the banking industry forces people to take on more debt and more risk over the years, squeezing families harder to rake in giant profits.

An emphasis on consumer education is among its more ambitious reforms to bankruptcy. Changes instituted by this new law took effect on October 17, 2005. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 amended the U.S. Bankruptcy Code.

Consumer Protection Laws

Which are the bankrutcy laws tackling credit vd debt
A small home garden with 4 US dollar notes planted in the ground

Consumer protection laws for credit vs debt such as the Fair Debt Collection Practices Act and the Truth in Lending Act get overseen by Federal agencies. The Federal Trade Commission (FTC),  makes consumer protection law its primary mission and tries to make sure competitive balance is preserved in matters of national commerce.

By the time most people file for bankruptcy, their credit is already trashed, they have a high debt-to-income ratio – a key indicator lenders look at – and they’ve likely defaulted on more than a few accounts.

— Jean Chatzky

6 questions on credit vs debt according to Elizabeth Warren’s plan

  1. Do current debt reforms laws it easier for people being crushed by debt to obtain relief through bankruptcy?
  2. Can you exercise your rights to take care of yourself and your children while in the bankruptcy process?
  3. Why are absurd rules still in force today, making it nearly impossible to discharge student loan debt in bankruptcy?
  4. How easy is it to start afresh to pick up the pieces to rebuild your financial life when you protect your homes and cars in bankruptcy?
  5. Why is the bankruptcy system plagued with shameful racial and gender disparities?
  6. Who actually benefits from all the loopholes that allow wealthy and corporate creditors to abuse the bankruptcy system at the expense of everyone else?

The law on credit vs debt

If you’re in poverty and all you have is a debit card or a prepaid card or you pay in cash, it does not report to a credit bureau. If it doesn’t report to a credit bureau, it cannot create a credit score for yourself.

Despite the fact that honest debtors that reside in or with domiciled places of business, or property in the United States, file for bankruptcy primarily for discharge, some do not get it.  The reasons include removing, destroying or concealing property within years of filling; those who lack sufficient explanation of loss or deficiency of assets; failure to comply with Bankruptcy Court orders; et cetera (Pittaluga, (2000).

Therefore, the credit vs debt law protects both the creditors and debtors.

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