Credit Card Debt: Bankruptcy and It's Protection for Debtors

Many situations exist that can take a consumer into deep credit card debt. It's not always a matter of carefree spending. Some find that they're financing their basic bills on their cards, others finance a small business that's failing. The common thread is that the debtors have the thought in the back of their mind that they'll pay the credit cards down when things improve. Except the improvements never come and the payments get paid late or not at all. That's when bankruptcy comes into view.

The Pitfalls of Falling Behind in Payments

Creditors do not care that you're having financial difficulties. Never mind the fact that the bank your credit card is issued through took billions in TARP money. The banks want your money to pay their shareholders and their overinflated salaries while trying to make you feel guilty because they gave you their money to use. A bank does not feel they need to be fair to someone who's at a financial disadvantage and acts accordingly.

A creditor is going to hold you to your obligation under any circumstance. Either they sell your debt to a collection agency or they take you to court for a judgment. A collection agency is the lesser of two evils but they still make your life miserable with non-stop harassment. A judgment is the worst thing to have happen as it will allow your creditor to garnish your wages as well as showing up on your credit report.

Bankruptcy and the Protection it Offers

The bankruptcy process has what's called the automatic stay. Creditors cannot pursue any collection activities against you once you've filed. Provided that no creditors object to the bankruptcy and you're discharged, none of these debts can ever come back to haunt you again. If a creditor does decide to aggressively violate the automatic stay, the debtor can sue under the Fair Credit and Trading Act for damages.

If you've reached a point where the stress from collection activities is affecting your life, consider filing for bankruptcy. The hit to your credit rating will be the same as if you hadn't filed. Bankruptcy gives you a fresh start with your financial life, allowing you to rebuild your credit from the beginning.

Consult a Bankruptcy Lawyer

Consider talking to a lawyer if you're not sure that bankruptcy is for you. They will be able to take a look at your financial situation, ask pertinent questions of you, and provide answers to your most pressing questions. You may feel somewhat embarrassed going in to a meeting. However, your questions will be answered and you'll have a better idea of if you should proceed or not.

Think Bankruptcy Might Be for You?