When you buy things on credit, it’s easy to become overwhelmed and fall behind on your payments. Once you start sliding down that slippery slope into extreme debt, you might feel hopeless. But there could be a solution to getting out from under the mountain of credit card debt.
Bankruptcy often leaves a bad taste in people’s mouths, but it can be a useful tool for those struggling with credit card debt. Learn how bankruptcy might help you and how to file.
The Risks Associated with Credit Card Debt
No one plans on accruing credit card debt. Most people plan on spending on the essentials or staying within their means. However, unexpected costs, forgotten bills, or fine print can easily catch up to you.
You could face catastrophic consequences if you have credit card debt. You might experience:
Falling Credit Scores
Nowadays, a credit score is the key to opportunities. Not only do they influence the loans, premiums, or interest rates available to you, but they can also affect your housing situation.
Credit card debt can cause your score to dip drastically, limiting financial growth or even threatening your day-to-day life.
Higher Interest Rates
Credit card companies are for-profit businesses. They aren’t in the practice of giving out money, even if their credit cards are advertised as such. These companies want their money back.
Credit card companies may decide to charge higher interest rates, which means that the debt curve may become even steeper for you.
Debt Collection Actions
If your debt becomes large enough, your creditor may decide to sell your debt to a debt buyer or . A debt collector will contact you if they believe you’re behind on a payment. They can be persistent. The calls will continue until your debt is paid and you’ve entered a payment plan or found a way to get the debt handled.
These aren’t the only negative aspects of credit card debt, but they can give you an idea of what you might expect or are experiencing right now. Filing for bankruptcy might be the solution to help you avoid or relief your experiences.
What Can Bankruptcy Accomplish?
Bankruptcy isn’t a magic process, and it has certain negative implications. It’s a program created by federal law designed to eliminate certain debts or create a plan that will let you catch up on debt payments.
Filing for bankruptcy provides legal protection as you try to organize or discharge your debt. It can give you space to build a plan to get on top of your debt and climb towards progress.
If you file for bankruptcy, you’ll receive an automatic stay, blocking actions from creditors that might result in losing a home or garnishing your wages. An automatic stay can also stop collection calls, utility shut-offs, or lawsuits.
Your debts might be discharged after you file for bankruptcy. That means your debt is canceled. Eligible debts include credit cards. There might still be consequences, like losing assets associated with debt, but you won’t have to pay back what you owe. A bankruptcy attorney can fully explain other benefits related to bankruptcy filings.
How Should I File for Bankruptcy?
If you’re considering bankruptcy, there are really two options to handle your credit card debt: Chapter 7 or Chapter 13. Both methods approach debt consolidation or cancellation differently, and there are different requirements for both of them.
Filing for Chapter 7 Bankruptcy
Chapter 7 bankruptcy eliminates certain debts for qualifying applicants. You can file a petition for Chapter 7 bankruptcy if the debt you’re trying to wipe out is eligible. Credit card debt is eligible, but a student loan debt is ineligible.
You must meet certain income, expense, and debt requirements to file for Chapter 7. Someone with low wages, high expenses, and large debts can qualify, but your circumstances could conflict and make you ineligible.
If your application is accepted, you’ll meet with creditors to determine which assets can be sold to satisfy your debt. Certain items like your home, car, or professional tools are protected. It’s best to discuss your options with an experienced Ohio bankruptcy attorney.
Applying for Chapter 13 Bankruptcy
Filing for Chapter 13 bankruptcy gives you a different approach to mitigate your debt. You won’t be liquidating assets to repay debt. Instead, this method allows you to reorganize your debt into a payment plan.
Chapter 13 gives you breathing room by establishing a payment plan to meet your obligations over time. It’s a practical approach, especially if you don’t qualify for Chapter 7 or you want to keep your assets.
There are restrictions to qualify for Chapter 13, but you have a good chance that if you can maintain a regular source of income, your unsecured debts are valued under $394,725, or your secured debt is less than $1.2 million.
An attorney familiar with bankruptcy laws can help you evaluate your options.
How Can a Lawyer Help Me with My Credit Card Debts?
Managing credit card debt can feel like a daunting task. You could feel harassed whenever a collector calls. You might be panicking because you may have to sell your house or car. A lawyer can provide you stability and guide you to a solution that can allow you to protect your assets and future.
Filing for bankruptcy might seem as simple as filling out an application, but you should be sure you have the correct forms, information, and methods to wipe out your debt. Errors on your forms could easily appear as attempts to deceive your creditors or the government. Don’t try to tackle this alone. An attorney can help you protect yourself and regain financial independence.
Call Our Ohio Bankruptcy Lawyers Now
If you’re facing a large amount of credit card debt, you have options to help you restore your life. You don’t need to face it alone. Attorney Adrienne Hines with Kademenos, Wisehart, Hines, Dolyk & Wright Co. LPA has helped countless clients through their bankruptcy proceedings. She understands how devastating debt is for those suffering through it.