Popular searches:
file chapter 7 bankruptcy when to file bankruptcy file bankruptcy yourself
Is filing bankruptcy a good option to get rid of credit card debt?
Talk to a Debt Relief Attorney
Talk to a Lawyer About Your Options for Debt Relief
Select the type of Lawyer you need
I have been struggling with credit card debt ever since I got divorced two years ago. I have made every effort to stay on top of the payments, but my income will not allow me to get rid of it. I have been making the minimum payments, but recently I missed a few and two of my credit cards increased the interest rate on me.
I'm out of options at this point, and want to know what bankruptcy will do in this situation.
Recent Legal Answers
This site does not provide legal advice and users of this site should not interpret any of the information presented here as legal advice. The information provided merely conveys general information related to commonly asked legal questions. We are not a law firm and the employees responding to questions are not acting as your legal attorney. You should ultimately consult with a Lawyer for your case.
Answers
Yes, filing bankruptcy will get rid of all of your unsecured debts, such as credit cards. Whether you file for chapter 7 or chapter 13, unsecured debts will be discharged by the bankruptcy court.
There are a few things you should know about how credit card companies operate.
Credit Card Companies Love Minimum Payments
Credit card companies make millions of dollars off of people just like you that can only afford to make the minimum payment, because then they can keep you on the hook with barely legal interest rates. Charging 20% or more earns them revenue they could get no other way, and it's at your expense.
As long as you keep paying the minimum payment, you will never get rid of your debt, and you just keep fueling the card companies income.
Credit Card Companies Hate Bankruptcy
Filing for bankruptcy offers debtors something no other debt reduction alternative can do: Protection from the US Court System. When you file for bankruptcy, a trustee from the bankruptcy court will take over your case, and force the credit card companies to immediately stop taking any more money from you. Then he or she will evaluate your income and your secured debts, such as a house or car, and make sure you can afford those first.
Most unsecured debts will be erased, and there is nothing the credit card company can do about it.
Now, there are some downsides to filing for bankruptcy, the biggest one being the impact on your credit score. You can expect your credit score to go down almost fifty points after filing. The good news is, you will be in a place where you can afford to pay your bills again and on time, meaning your credit score will come back after a few months.
You should talk to a bankruptcy lawyer about your financial situation to find out if bankruptcy is a better option then the alternatives like consolidating debt. Most bankruptcy attorneys can also negotiate debts with creditors if that is a better option for you than filing for bankruptcy.
Good luck.
References:
Posted by Staff Writer on 07 Mar 2010
1 person found this useful
(2 Votes)Not sure where to start? Use this form to contact an experienced attorney. They will provide a free consultation and assist you with choosing the right path for your case.
Talk to a Lawyer
Describe Your Case
Tell us more about your case so that we can show you lawyers that serve your area.