Bankruptcy and High Interest Rate Credit Cards
Is bankruptcy a solution for high interest rate credit cards? Generally our answer is yes. We see so many people in our office who are just a few dollars away for making ends meet. Many times this is because they are paying over 20% interest on high rate credit cards. When payments aren’t paid timely people incur a substantial late fee. Our clients tell us if they could earn just a little bit more money or if they could reduce their credit card payments each month, then they would be able to better provide for their family or to build a cushion in case of emergencies; however what we see is that the extra bit of income never arrives, and the credit card payments simply get higher and higher each month.
There is good news and a solution to the problem. Even if you are a person or a couple who has a moderate income and possible assets that you could lose in a Chapter 7 bankruptcy, you can use a Chapter 13 debt consolidation to reorganize the debt and pay 0% interest to all of the credit card companies. Some people consider taking out a second mortgage to pay off their credit card debt; however, we suggest that this never a good move because what we have seen is that once the credit cards are reduced, many people do not close the accounts but continue to use the credit cards. They then start charging to the credit cards again. When this happens the debtor is simply in a worse off position than before they took out the second mortgage on their home.
Our Montgomery bankruptcy attorneys have seen that many people have high credit card balances not because they went on multiple shopping sprees, but because they lost their job or their hours were cut back or they were unable to work due to a medical emergency and had to live off the credit cards. They use the credit cards to buy groceries, to buy school supplies for their children, or to keep their automobile in working order. If the client does not have significant assets which would prevent them from filing a Chapter 7 bankruptcy, then we would suggest that they look at a Chapter 7 to determine if this is the best option. This is always our starting point. If the client has significant or moderate assets then we would always look at a Chapter 13. In a Chapter 13 debt consolidation plan, you can may discharge all of the credit card debt; pay part of it; or pay all of it. Your income and your assets are factors to consider when calculating a Chapter 13 debt consolidation plan.
Regardless if you pay nothing to your credit card companies or if you pay some of the debt, you will likely still be in better financial shape than you are when you are paying the high interest rates to the credit card companies. Of course when filing this Chapter 13 debt consolidation, you may also include any home arrearage that you might have and you may include the debt that you may owe on any secured items such as cars, furniture, or jewelry. You can also address any child support arrearage or possible tax debt that you might have. What we suggest is that you set an appointment to meet with our Montgomery bankruptcy lawyers to determine how you can best address high interest rate credit cards and any other debts that you might have through a Chapter 7 bankruptcy or a Chapter 13 debt consolidation. Solutions do exist for high-interest credit card payments. If you are stuck in a cycle of high interest rate credit cards that seem to never end, then simply make an appointment with our experienced Montgomery bankruptcy attorneys to come in and discuss your situation.
At The Sellers Law Firm, all consultations are free, and we can usually see you within 24 hours. We have offices in Montgomery, Selma, Greenville, and Troy. Call us at 334-LAWYERS (529-9377) and set an appointment and meet the team. You may also use the “text us” link or Contact Form on our website. Remember that doing nothing changes nothing so act today!