Credit card debt is one of the main reasons individuals file for bankruptcy. American families carry approximately $6,000 in credit card debt. Credit card debt is considered unsecured debt, making it more difficult for the credit card companies to collect what is owed. On secured debt, the lender seizes the property that the loan is attached to and sells it to recoup some of the money owed.
When we start using credit cards to make our paychecks stretch, then we end up paying more than we usually would when you add the interest onto our groceries and gas. Getting us even further behind in our debt.
Making the minimum payments barely puts a dent in the debt due to high-interest rates and fees associated with the cards.
Negotiate the Debt
Some debtors may try to negotiate with the credit card companies, asking for a lower balance, reducing the interest rate or freezing the fee’s until you are current again. If you are unable to meet these arrangements, you may be worse off than before you started the payment plan.
Chapter 7 Bankruptcy
If you qualify by passing the means test in your part of the United States than you can eliminate your unsecured debt with a Chapter 7 bankruptcy.
Chapter 13 Bankruptcy
If you do not qualify for a Chapter 7 bankruptcy, Chapter 13 is a reorganization type of bankruptcy. You will have three to five years to pay back your debt. After you have made the court approved payments, any remaining debt, including credit card debt, will be discharged.
If you have a large amount of credit card debt or would like to get some answers before you file for bankruptcy, contact a Dayton bankruptcy attorney to discuss your unique situation and what options you may have to get debt relief.