Every year, hundreds of thousands of people in the United States seek the help of an attorney to file for bankruptcy; and many of those filings happen as a result of one of the worst financial plagues of the modern era, credit card debt. If you are struggling with credit card debt and you’re considering declaring bankruptcy, here are some basic things you need to know:
From Personal Charge Cards To Personal Credit Cards
The credit cards we know today started out as personal ‘charge’ cards in the 1950s. The balances on these cards had to be paid off every month. By the next decade, charge cards had become personal ‘credit’ cards that allowed consumers to amass debt over time while making small monthly payments. These early credit cards were mass-mailed to people that banks considered good credit risks; but in their zeal to create new credit card customers, cards were sent to people who were also bad credit risks – the unemployed, drug addicts, compulsive debtors. As a result, millions of unsolicited credit cards were dumped into the U.S. population before laws could be enacted limiting credit card companies to unsolicited mailings of credit card applications only.
Personal Credit Cards Are Still Easy To Get
Even with the laws in place, it is still relatively easy to get a credit card today. You’ve probably noticed that you receive unsolicited credit card applications in the mail on a daily basis; in fact, credit card companies flood the mail with applications that don’t always end up in the hands of people who should have credit cards, including people without jobs, recent college graduates and people who already have at least one bankruptcy under their belts. Even people who are already drowning in debt are being given credit cards. By the end of 2015, U.S. consumers owed more than $917 billion in credit card debt and that number isn’t likely to drop in 2016
Ways To Reduce Your Credit Card Debt
Before you see an attorney about filing for bankruptcy, take some practical steps to reduce your credit card debt that include calling your credit card companies to ask for lower interest rates for your cards, writing down all of your monthly credit card expenditures to see which can be eliminated, choosing a payoff strategy that includes paying off the cards with the highest interest rates first and taking your credit cards out of your wallet so you’re not tempted to use them.
What Happens To Your Credit Card Debt In Bankruptcy
There are two types of bankruptcy you may be eligible to file for – Chapter 7 and Chapter 13. In Chapter 7, you should be able to discharge (or wipe out) all of your credit card debt. Exceptions to this are charges incurred through fraud, which refers to the use of a credit card to obtain cash advances and to make certain purchases within a set number of days of filing for bankruptcy. In Chapter 13, which is a type of bankruptcy that reorganizes your debt, you agree to repay your creditors over a period of 3 to 5 years. Debts are prioritized with credit card debt being the lowest priority for repayment. This means that after your repayment period has ended, any credit card debt that remains will be discharged.
To find out more about bankruptcy and credit card debt, talk to an attorney who specializes in bankruptcy, Collins & Arnove in Wylie, TX, at (972) 516-4255. You can also visit www.ntb.wpmudev.host to get more information.
Collins & Arnove | Bankruptcy Attorney Wylie TX | 972-516-4255