Making the Minimum Payment Forever: When to Consider Bankruptcy

Minimum payments allow people unable to make large monthly payment to pay credit card debt and avoid late and/ or over-the-limit fees. Typically, the amount of the minimum payment is calculated by the credit card company and is based on the percentage of people’s total credit card debt. Although minimum payments are extremely enticing (the payments allow individuals to make purchases without paying the total amount of the purchase cost), they do more harm than good. According to Lending Tree, making only the required minimum payments to pay credit card debt can trap people in debt longer and cost more in the long run.

Use Minimum Payments To Pay Credit Card Debt And Never Get Anywhere

Minimum payments are just that—the smallest amount of money paid on credit card debt. The credit card debt doesn’t decrease. In other words, people are prolonging and possibly causing more debt when they pay credit card debt with minimum payments. To pay down the credit card debt, people will have to make more than minimum payments. This means if the credit card company request a minimum payment of $75 people will have to make a payment of $100 to pay down the debt.

Consider Bankruptcy When People Want To Eliminate Or Reduce Credit Card Debt

Personal bankruptcy is a legal process which allows people to stop making minimum payments and reduce or eliminate credit card debts. Under chapter 13, people can repay their debts in three to five years. Typically, people must send monthly payments to bankruptcy trustees. The payments are then forwarded to the credit card company. If the individual can’t afford to repay debt, they can file for chapter 7. With the chapter 7 option, people can expunge debt without repaying.

Individuals Should Consider Bankruptcy If They Are Facing Debt Collection

Although people may be paying minimum payments, they could be behind on other financial obligations. For example, creditors such as mortgage company or payday lenders may be threatening to sue. If this occurs, individuals can file personal bankruptcy and stop the debt collection activities.

Seek Legal Help If Minimum Payments Take Forever To Pay Credit Card Debt

If people are confused or hesitant to pursue bankruptcy, they should talk with bankruptcy lawyers. The lawyers will explain the bankruptcy process and what is needed to file. In addition, the bankruptcy attorneys can file the required documentation to file bankruptcy.

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