Credit cards have become an even more useful tool to many Americans during these difficult economic times. Credit cards allow individuals to spend more than then currently have in their bank accounts to cover expenses by 'borrowing' from a credit card company. But spending beyond one's bank account can eventually lead to unmanageable credit card debt.

But, Americans are beginning to use credit cards less. Credit card use fell in both June and July which is the first time in nearly a year. Total borrowing declined $3.3 billion from June to July. The decrease in credit card debt was offset by a slight increase in both car and student loans.

These borrowing figures are well above the pre-recession levels and much higher than previously estimated by the Federal Reserve in December 2010. The debt levels declined even though spending has increased in July by the largest amount in five months.

The data shows that Americans have been using their credit cards less since the 2008 economic crisis but have increased their student loan debt. Credit card debt decreased from $1.03 trillion in 2008 to $850.7 billion in July of this year, while student loan debt increased from $1.56 trillion in 2008 to $1.85 trillion in July.

While bankruptcy is one way to get out from under mounting debt, student loans present complications. The standard that a borrower must meet in order to discharge student loans in bankruptcy is very high - the debt must constitute a severe hardship for the borrower, as determined by a court. The court will take into account factors like the borrower's income, health and age when ruling on the matter. Under current law, meeting this standard and discharging student loans through bankruptcy is nearly impossible.

Chapter 7 bankruptcy, however, allows the consumer to discharge many other debts, including credit card debt. Chapter 13 bankruptcy allows for a reorganization plan. This allows the consumer time to create a manageable plan to repay substantial debts. Either of these options may make it possible for a borrower to avoid defaulting on student loans.

Source: The Sacramento Bee, "US consumers cut credit card use for 2nd month," Christopher Rugaber, Sep. 10, 2012