Eliminate Credit Card Debt
Credit Card Debt Relief
Credit card debt can quickly accumulate, before you realize that you lack the means to pay back the debt. This mounting debt can lead to steep interest charges, calls from creditors and more. When your credit card debt becomes insurmountable, the bankruptcy attorneys at O’Bryan Law Offices can explore your options. Assisting individuals and families across Kentucky and Indiana for the past 30 years, we provide the knowledgeable, tailored strategy you need to find credit card debt relief.
How to Get Out of Credit Card Debt
When you find yourself unable to make even minimum payments and receiving constant credit harassment calls, it may be time to consider your options.
You may have several options to relieve yourself of overwhelming credit card debt:
- File for Chapter 7 bankruptcy.
- File for Chapter 13 bankruptcy.
- Consolidate your debt.
- Pursue debt settlement.
- Pay it off.
Filing for bankruptcy may seem unsettling. However, it may be the right option to help you start fresh. We will discuss the options available for your unique situation.
Is It Bad to Have Credit Card Debt?
Although the term “debt” has a negative connotation, there is “good debt” and “bad debt.” Debt that aids in the acquisition of appreciating assets, such as a home or a company, is typically regarded as beneficial. Debt secured by collateral that you may sell if necessary, such as a car, might be beneficial or detrimental depending on the loan conditions. However, there is one form of debt that is universally seen as bad: credit card debt. Here’s why carrying a credit card debt from month to month is a bad idea.
With APRs in the teens and twenties, credit cards are often the most costly debt you can take on, whereas education, mortgages, and personal loans typically have interest rates in the mid-single digits. This is why most individuals advise against putting major costs like medical debt on credit cards when there are many less expensive alternatives.
Credit card debt isn’t utilized to purchase items that will appreciate in value. It may be used to buy depreciating goods like furniture, clothing, and electronics, as well as consumables like food and gasoline. While there’s nothing wrong with any of these purchases, paying interest on them is needless and can considerably increase their real costs.
How to Consolidate Credit Card Debt
Debt consolidation is when you pay off existing debt with a new loan or credit card. While the term “consolidate” usually refers to combining numerous credit accounts into one, you may also consolidate a single credit card debt. Consolidating debt is most effective when the new loan or credit card has a lower interest rate than the one you’re presently paying. You can save money and even pay off your debt faster if you have a lower rate.
If you wish to combine several loan accounts, the procedure can also make repayment easier by providing you only one monthly payment to keep track of. Also, if you have credit cards with no defined payback terms, a personal loan with a specified repayment schedule may provide you with the structure you need to keep to your repayment schedule.
How to Settle Credit Card Debt
Debt settlement is a deal between a lender and a borrower to make a significant, one-time payment toward an existing amount in exchange for the remaining debt being forgiven. For example, someone who owes $10,000 on a single credit card may approach the firm and offer to pay $5,000. The credit card company promises to waive or delete the remaining $5,000 due in exchange for this one-time payment.
While the potential of reaching an agreement should inspire everyone to attempt, there’s a significant probability you’ll be told “no” at some point. If that’s the case, don’t just hang up and walk away. Instead, inquire with your credit card provider about lowering your card’s annual percentage rate (APR), lowering your monthly payment, or arranging a different payment plan. Often, the debt settlement agent for your credit card will feel awful about having to reject your offer and will agree to one of these alternative possibilities.
How to Pay Off Credit Card Debt
When you’re just scraping by financially, it might seem hard to make a dent in your credit card debt. The fact is that if you don’t have any additional cash to put toward your credit card debt each month, you’ll have to either reduce your spending or increase your income to make any headway. However, with some planning and determination, you can make changes to your budget that will give you more flexibility and allow you to begin paying down your credit cards.
When you’re ready to modify your spending patterns and get rid of credit card debt, a budget may be quite beneficial. Look for strategies to create extra money that you can use to pay off debt if you’re currently on a tight budget or would prefer to earn more than spend less. You might be able to determine your best budgeting technique, learn how to bargain with creditors, or apply for economic hardship programs to decrease some of your costs with the help of trustworthy financial professionals.
Will a Chapter 7 Bankruptcy Help Me Get Credit Card Debt Relief?
Most or all unsecured, nonpriority debt will be discharged (wiped away) in a Chapter 7 bankruptcy. Medical bills, personal loans, and the majority of credit card debt are examples of unsecured, non-priority debt that can be discharged in bankruptcy. Child support and some tax obligations are examples of non-dischargeable priority debts that you will be liable for paying.
You must give up your nonexempt property, which is anything that isn’t protected by a bankruptcy exemption, in exchange. Your nonexempt property will be sold by the Chapter 7 bankruptcy trustee, and the money will be distributed to your creditors.
Will a Chapter 13 Bankruptcy Help Me Get Credit Card Debt Relief?
In a Chapter 13 bankruptcy, you repay your creditors in full or in part over the course of three to five years under a repayment plan. Only a part of your unsecured, non-priority debt, such as credit card debt, is generally covered by the plan.
The amount you’ll pay is determined on your disposable income as well as the value of your nonexempt property (you keep all of your property in Chapter 13, but you must pay for the nonexempt portion). Throughout your plan, you’ll pay the bigger of the two sums.
Most Chapter 13 filers pay just a tiny portion of their credit card and other unsecured obligations, and the remaining credit card amount is dismissed at the conclusion of the payback period.
Exceptions to Credit Card Debt Relief in Bankruptcy
In certain situations, filing for Chapter 7 will not be enough to wipe away your credit card debt. The discharge of your credit card debt may be challenged by your creditor at any moment. If you win, the debt will not be discharged by the court, and you will be responsible for paying it when your case is over.
The credit card lender may, in exceptional circumstances, obtain a security interest in some of your property as part of the credit card agreement. Check your contract and receipt for collateral such as jewelry, gadgets, beds, furniture, and major appliances. If the loan isn’t unsecured, you’ll be able to pay it off, but the creditor will still have a claim on the property used to secure the debt. Find out more about secured real estate.
Contact a Louisville Bankruptcy Attorney Today
If you need help either restructuring or building back your finances, O’Bryan Law Offices are here for you. With the help of an experienced Louisville bankruptcy attorney, we’ll get you back on track to being debt-free. For more information about credit card debt relief, or to schedule your free consultation, please call our office at 502-400-4020 today.