Dave Ramsey’s Hatred of Bankruptcy and Credit Cards Makes No Logical Sense

I should probably never preface an article with this but here goes. If you are a die hard Dave Ramsey fan you are probably going to disagree with what I have to say. I get it. But all I ask is that you read the post, think about it, and then let’s engage in a discussion in the comments section below.

For the rest not blindly mesmerized by Dave Ramsey, consider that dealing with debt and credit is a balanced approach. Like many things in life, large swings, to one side or another leave you out of balance.

From time to time people bring up points that apparently the personal finance guru Dave Ramsey has taught or stated. So I thought I’d take a close look at what he had to say.

Rather than make any assumptions based on what I heard from people I instead went to Dave’s site and researched them for myself.

Dave Ramsey Says, “Responsible use of a credit card does not exist.”

Ramsey credit card

Dave also says, “There is no positive side to credit card use. You will spend more if you use credit cards. Even by paying the bills on time, you are not beating the system! But most families don’t pay on time.” – Source

But the fact is that most consumers do pay their bills on time. At the time of this article, only 2.75 percent of credit cards are delinquent. That means 97.25 percent do pay their cards on time. Certainly that’s “most families.”

According to Time magazine, about 45 percent of card users carry a balance from month to month. But 55 percent, do not. – Source

But I disagree with all of that. We can’t assume that people are stupid and can’t learn to build better awareness about how to manage their debt. One of the great teachable moments is by learning from mistakes.

If responsible use of credit cards does not really exist then how can people exercise responsibility when owning sharp kitchen knives or driving down a road with only a painted line separating them from oncoming traffic?

More often than not, people are responsible and can operate things appropriately. We can’t begin with the assumption that all people are idiots.

Responsible use of a credit card does exist. And less than half of all people carry balances month-to-month on their credit cards.

Credit cards also provide consumers with greater financial security. When a transaction goes wonky and the incorrect amount gets charged or you have a problem with a merchant, using a credit card prevents that disputed amount from hitting your checking account. It provides you with a financial buffer.

A debit card is an electronic check. You would no more hand a waiter at a restaurant a blank check for them to take it to pay for your meal but that’s exactly what you do when you hand that stranger your debit card. We just never think about it. And one reason is this continued argument that debit cards are better than credit cards.

Ramsey says, “If you “have to” use plastic, I suggest a debit card. I use them for travel and the occasional convenience of ordering something over the Internet or phone. Other than that, I use cash.” Awesome, but have you tried to rent a car with a debit card or cash? Many places just won’t do it. If you had a credit card, then there is no problem.

Ramsey tells readers “You cannot beat the credit card companies” but that’s simply not true. Just pay your bill off in full at the end of the month and the credit card company will make no money off interest, no matter what interest rate they charge.

And the good use of credit builds a great credit score which will be invaluable if you want to buy a house, get the lowest rate mortgage, pay less for car insurance, etc. There is no downside to having a great credit score if you are managing your finances well.

But Ramsey seems to think other issues in life do not need such aggressive action or blanket elimination, like gun control.




Tweet Source

So if people should have a right to bear arms, and I’m not saying they shouldn’t, and I’m assuming they can do it responsibly, then why can’t people bear credit cards with equal responsibility?

Let me put this into a different light. What if we took Dave’s words and instead substituted a gun related word instead for credit card, would it becomes a message that would alarm his followers.

From Dave’s Page The Truth About Credit Card Debt

Myth: Aren’t there positive uses of a [gun]?
Truth: Responsible use of a [gun] does not exist. [Guns] are a major problem in America.

There is no positive side to [semiautomatic weapon] use. You will [shoot] more if you use a [semiautomatic weapon].

Use common sense. When you play with a multi-billion dollar industry and you think you’re going to win at their game, you are naive. You cannot beat the [gun] companies.

All of a sudden the imbalance in the statements seems extreme, doesn’t it? So if Ramsey feels people can’t handle credit cards and should not own them then should we take all the guns away from people as well?

See also  Helanie Olen Talks About Bad Advice by Suze Orman, David Bach and Dave Ramsey

How about we just use both of them responsibly, like adults.

Dave Ramsey Says, “Bankruptcy is a gut-wrenching, life-changing event that causes lifelong damage.”

Bankruptcy is not something I recommend any more than I would recommend divorce. Are there times when good people see no way out and file bankruptcy? Yes, but I will still talk you out of bankruptcy if given the opportunity. Few people who have been through bankruptcy would report that it is a painless wiping-clean of the slate, after which you merrily trot off into your future to start fresh.

Don’t let anyone fool you. I have been through bankruptcy and have worked with bankruptcy for decades, and it is not a place you want to visit. Bankruptcy is listed in the top five life-altering negative events that we can go through, along with divorce, severe illness, disability, and loss of a loved one. I would never say that bankruptcy is as bad as losing a loved one, but it is life-altering and leaves deep wounds both to the psyche and the credit report. – Source

As a result of my experience, I don’t like bankruptcy. Do I hate it? Yes. I always look for another solution. – Source

Dave imparts this negative connotation about bankruptcy to his flock. But why the bias?

Bankruptcy happens to be the only legal intervention tool to allow people to deal with their creditors and in fact to create a binding repayment plan when creditors can’t agree.

Some people say that bankruptcy is immoral because you wipe away your debt but there is nothing that prevents anyone from repaying their creditors in full as they best can, after they get the protection bankruptcy offers. Is that immoral?

So the belief is that bankruptcy is somehow corrupting or as Ramsey says, an “event that causes lifelong damage.”


How about we put continued financial misery in the same category as spousal abuse? Should we not try to do everything to avoid that? Why stay in an abusive relationship that’s bad for the kids?

Dave is entitled to his opinion. But the facts don’t support his statements. If we look at bankruptcy purely from a religious or faith based point of view then we need to consider these points:

  1. Is Bankruptcy Sinful and Bad or Right and Moral? An Examination
  2. What Does the Bible Say About Bankruptcy? Is Bankruptcy Scriptural?
  3. The Ethical Considerations of Bankruptcy

If we look at bankruptcy from a reality and practical point of view then we need to consider the following:

For all those that think bankruptcy is a last resort, I’d love to show you the damage you’ve done in espousing that fairy tale. I’ve watched countless numbers of people lose everything just to live up to your imaginary and fictitious belief that bankruptcy should be a last resort.

In order to avoid bankruptcy, people will sell all their assets and limp along till they hit the wall, broke and without options. They will drain their protected retirement accounts, just to avoid bankruptcy. They will believe the sales pitch of debt relief companies and credit counselors that the widget those companies are selling is better, because bankruptcy should only be the last resort.

I’ve written about the “last resort” marketing message many times. And each time it was used as a way to scare or persuade the consumer to stay away from bankruptcy and buy the peddled debt relief product instead. But the reality is that in the face of no other reasonable, logical, or good options, bankruptcy should often times be the first option to investigate on the list.

Bankruptcy is also often the least expensive way to deal with debt in the shortest period of time. And for most people that file bankruptcy, their debt will be eliminated in a few months, and their retirement funds will be protected from creditors. Those funds will be protected for when they need them most, when they can’t work and need to be able to feed themselves.

Here is a better statement of fact about bankruptcy, it’s not the first or last resort, but one of the options consumers have to deal with their debt. There is no way to know if bankruptcy is the most appropriate solution in a particular situation unless the consumer talks to a local bankruptcy attorney.

And if you press people on why they say bankruptcy should be the last resort, ask them this, “why?” I bet they come back with more myths like it will wreck your credit for ten years or it will prevent you from getting a job. Both of those myths are substantially unsupported. The reality is that it’s silly easy to rebuild your credit after bankruptcy and the facts don’t support widespread employment discrimination after bankruptcy.

Another common excuse I hear is that bankruptcy is immoral. That’s another argument based in perception rather than reality. There is no reason why someone can’t file bankruptcy to get legal from unreasonable creditors and then begin to rebuild their life and elect to repay creditors. There is also the issue of if it is more moral to leave yourself and family stranded in an unsafe life or financial position while you limp along for years trying to repair the past.

If bankruptcy is the right solution for churches, airlines, and cities, then why can’t it be the right solution for you?Click to Tweet

For more on this you can read a previous article, Dave Ramsey and His Un-Truth About Bankruptcy.

I went bankrupt, just like Dave did. And I admit at the time it was painful. But the reason it was painful was because I didn’t have someone there helping me to understand all of my options. If I had I would have walked into bankruptcy knowing that for me, at that time, bankruptcy was the best option for me. Not life destroying.

You can view my story below.

The reality, is that for me, like for Dave, bankruptcy allowed us to get a legal fresh start and second chance.

A couple of years after we had rebuilt our good credit, purchased a home, and I had a great job with IBM.

Just because we wound up not liking the customer service our bankruptcy attorney delivered, it didn’t mean that bankruptcy was not right for us. In fact, without our bankruptcy experience I wouldn’t be here, just like Dave wouldn’t be probably, helping people.

If there had been someone at that time who could have helped us to understand the process and learn that bankruptcy was not the end of our life but the start of a new life then the pain we felt at the time would have been mitigated.

Just because something might be painful
doesn’t mean it’s not right.

I’m not suggesting that everyone should file bankruptcy to deal with their debt situation. What I am saying is that before anyone can make a fully informed decision about any path out of debt they need to be educated about the realities of the options.

Dave’s statements about his truth about bankruptcy just seem odd to me.

He says, “Too many bankruptcy filers never really recover from their financial distress because they never learn new ways to manage their money.”

Yet the rate at which people file bankruptcy again is very low.

He says, “As a result of that experience, Dave hates bankruptcy. That’s why, when someone asks him about whether or not to file, he’ll always try and help them find a better solution.”

Yet I went through a similar experience at the same time and I’m saying that bankruptcy is often the most logical solution.

He says, “Without a doubt, it’s a long process that will follow you around for years, even after it clears off of your credit report.”

But not being able to make your minimum payments and being delinquent on your debt will stay on your credit report for the same seven years as a chapter 13 bankruptcy does.

Constitution“That said, Dave doesn’t tell his listeners to never file for bankruptcy.”

Yet, that makes no logical sense. Why tell people they should never consider the one and only legal solution written into our Constitution to allow people to get a legal fresh start from their debts?

Bankruptcy in the United States is governed under the United States Constitution (Article 1, Section 8, Clause 4) which authorizes Congress to enact “uniform Laws on the subject of Bankruptcies throughout the United States.”

The Congress shall have Power To…

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

But Dave appears to have no problem defending the Second Amendment to the Constitution and protect an individual right to possess and carry firearms.” Guns good. Bankruptcy bad.

Just Think It All Through for Yourself

Everyone deserves to know the facts and truth about dealing with debt. I encourage everyone to just not be a blind follower of either Dave Ramsey or anyone else, including myself.

Before you let others tell you what is best for you, find out what is best for your situation and make a fully informed decision about how to tackle your debt based on the facts and not someone else’s lingering fear and regret.

I’d suggest you first read How to Get Out of Debt. The Honest and Unvarnished Truth and The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. They will give you a great overview of what we need to deal with to get you moving in the right direction.

Then use the free How to Get Out of Debt Calculator to review your options.

Once you’ve identified a company you want to work with, then follow my step-by-step guide on what you should look for and expect from a good debt relief company.

You can also always feel free to contact me for free help.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

58 thoughts on “Dave Ramsey’s Hatred of Bankruptcy and Credit Cards Makes No Logical Sense”

  1. Interesting, I came across this after reading your site for another article. I’ve always had a problem with this guy, especially comments like this “You don’t need a credit card to run a business,”

    I don’t know if he has credit “cards,” but I know for a fact that businesses owned by Dave Ramsey have used debt/credit. Otherwise they would not have (publicly available) credit scores. Several years ago, before a medical issue almost killed me and destroyed my finances, I was somewhat obsessed with building and maintaining my business credit. I had subscriptions to all the agencies and scoring models. I methodically built and grew my credit and credit limits using data from Experian, D&B, etc. You can pull a business credit report on anyone with the business name and state. Just pay for it. Some of them let you do a public search and will display how many credit lines a business has for free. I don’t know why a business that doesn’t use credit would have multiple credit lines show up when you search for their name, AND generate a (less than perfect and lower than mine) credit score.

  2. Thanks, Steve for this awesome article! I too agree with many of your points especially on the subject of bankruptcy. I have a good friend who was in debt to his eyeballs because he had made some bad money and business decisions. Long story short- bankruptcy was his best option. It gave him the clean slate to start over that he truly needed. Today he is doing well. So no- bankruptcy is not the end, it can be the beginning.
    Steve keep up the great job, your helping to educate us all.

  3. In Dave’s defence I would like to point out that the credit card companies have made a point of chaning the grace period from what was 30 days to 14 days without changing the payment due date. This suttle change that most people who pay the full balance every month don’t realize is if they don’t pay the bill in the first 14 days, next months bill will include the bill it’s self as part of a average daily balance finance charge. I just paid off a bill in full and was assessed $38.00 finance charge on my card with a 0 balance, I had been paying that every month without realizing it…

  4. Ok, so I listen to Ramsey but do not consider myself a fan ( that is just creepy if people do) I do agree with him in that you should try to pay back your debts, however it should not ruin your life paying creditors back who don’t play fair anyway! I do not agree with him about never filing for BK, and that is is the worse thing in the world, most people who file have credit a couple years later, and I can attest, I have had great credit before and companies still find a way to f—-you out of more money especially mortgage and auto companies- they will will find a way! My real issue is this whole gun control issue you bring up- I do not know what your stance is but not sure why you bring this into the debate- Dave is a much higher caliber that you ( pun intended) so you are actually embarrassing yourself even mentioning him. Don’t get me wrong Steve I know you are a smart guy- we actually know some of the same people and I am not trying to disrespect you buy Dave sells millions in advertising and you are operating a ” click through” web site in which your followers are allowed to post complete nonsense without any fact checking on anyone’s part . Before you ask me of an example just read through most of your loan modification blog about Prudent law firm, they are complete crooks however most of the people that posted ” questions” never even sent them money- you have a blog with the ramblings of a man around 1am about an ex employee and a guy name Derek who use to do his processing- The man could not even spell correctly and obviously had an ax to grind and you gave him the forum to do it which really killed your creditability- Again, stick to what you know is helping people with debt relief questions and leave the “Bill of Rights” out of your forum.

    • The article is not about gun control in any way. The only issue I raised was, “But Ramsey seems to think other issues in life do not need such aggressive action or blanket elimination, like gun control.” As evidenced by his tweet which I show. My point was that it appears Dave is not in favor of blanket action, like gun control. That’s it.

      As I said before in another comment, the issue about being pro-gun only has to do with responsibility.

      If we want people to be allowed to own guns then don’t we assume they will act responsibility. Can’t they certainly be responsible enough to own credit cards? Or are Ramsey’s word true, “Responsible use of a credit card does not exist.”

      As for your other issues, people do submit questions and the site answers the submitted questions based on the information given. If there is something that is factually inaccurate in any answer given on the site, every Q&A has a “report an error” button on it to let us know.

      You appear to take issue with ramblings of someone that submitted a question or left a comment, but we allow people to state their position and/or express their opinions, just as you’ve been able to do.


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