There are times when people get into trouble with credit card debt with no existing alternatives to climb out of it. Bankruptcy can be used for relief from them if you're willing to go through the process. Undeniably, it is a big step to take and one that most feel come with a stigma of failure. But credit card debt is not a one way street. Credit card companies seek to keep a consumer deep in debt by increasing interest rates two fold if not more with no logical reason. A monthly payment that was seeing the card paid down now barely makes a dent with an interest rate hike. Bankruptcy may be the only option available as debt spirals out of control.
When You Should File For Bankruptcy
You may be asking yourself if it's time to file. Examine your monthly payments to look for these warning signs:
- More than 25% of your income is going to your credit card bills. If you're paying almost all of your disposable income to the card issuers after paying the necessary bills, then yes, you should file.
- If you're robbing Peter to pay Paul, it's time. You can only keep shuffling money around for so long until it starts catching up to you. It's best to get out of the cycle by admitting to yourself you're in trouble.
- Letting payments slip is another warning sign. You could be lying to yourself that you'll get away with not paying every bill every month. This is an absolutely bad idea and one that could see legal action taken against you.
The Advantages Of Filing
There are definite advantages that are in favor of filing. The protections afforded the consumer via bankruptcy provide peace of mind.
- Collection calls stop. An automatic stay is issued upon filing of the paperwork, which means that all efforts to get you to pay debts stop.
- It gives you a clean start. Filing under Chapter 7 means that almost all of your debt is wiped out. The ones that remain tend to be student loans and certain municipal bills.
- You can protect your important assets from liens and potential seizures. You'll be given a chance to reaffirm car and house loans at a certain point in the bankruptcy, allowing you to keep your most important items.
Hiring A Lawyer For Bankruptcy
The best way of relieving your credit card debts through bankruptcy is to hire a lawyer. They work on your behalf with your creditors, running interference as needed. There's nothing like knowing that you'll get relief from the constant collection calls by being able to give them the number of your attorney. And when the time comes to renegotiate terms on key debts, you'll have someone who has experience with obtaining the best possible terms for you.
