Credit card debt has led many to consider filing for bankruptcy protection.
March 20, 2013 /24-7PressRelease/ -- Credit card debt and bankruptcy: should you file?
Article provided by Law Offices of Farnsworth Mortensen, PLLC
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A recent survey by Bankrate.com, a financial data company, revealed that just over half of those surveyed had more savings than credit card debt. This means that many Americans do not have anything to fall back on if a financial emergency arises. To make matters worse, they may be carrying high credit-card balances that will greatly limit their ability to emerge from the crisis in a sound financial place.
Many people simply make the minimum payments on their credit cards. This allows the balances to continue to gather interest, and in many cases, the individual will never see his or her balance decrease. Each payment that is made will simply go toward the interest that accrues each month. As the balances increase, the minimum payments will also increase, which can leave borrowers trapped.
There are potential solutions for those who are unable to make these payments. Some may try to work with their credit card company in an effort to reduce the amount of money that they owe. Not every company may be willing to agree to this sort of arrangement, and they may still continue to pursue collection actions if the individual is late with payments.
Many debt relief companies target those behind on their credit cards, and promise that they will be able to make the credit card debts disappear. They often advise borrowers to quit making payments, instead sending the money to the debt relief company to pay fees for its services. These borrowers often discover that the company has taken all of their money, and not made any payments on any of the debts they owed. This can lead to considerable financial hardships for those that rely on these services to get out of debt.
Filing for bankruptcy is another option that some may consider. When a person files for Chapter 7 bankruptcy, certain debts will be discharged by the process. This will include most credit card debt. In Chapter 13 bankruptcy, individuals will make monthly payments for a specific period of time.
The type of bankruptcy filed will depend upon the person's financial situation; however, both Chapter 7 and 11 offer the protections of the automatic stay. This means that all collection actions or lawsuits against a debtor must stop until the process is resolved. This ends all of the harassing letters and phones calls that a person may be receiving.
If you are having trouble making ends meet, speak to a bankruptcy attorney as soon as possible. Waiting too long may restrict the options that may be available for your situation. You need to know if bankruptcy is the right decision for you, and what you can do to prepare for the process.
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