This article takes a look into bankruptcy and credit card debt, and what you should consider before deciding to file for bankruptcy to achieve debt relief.
Typically, bankruptcy is considered to be the last of your options for dealing with credit card debt. The decision to file is a serious matter and the choice is not easy. But bankruptcy may make sense for people in certain situations.
To help determine whether filing is a viable solution for you, following are some important things to consider about bankruptcy and credit card debt.
You should be aware that a bankruptcy filing stays on your credit report for 10 years.
That means it will be difficult for you to secure new loans during that time, include borrowing for a new home or vehicle. Moreover, getting a new cell phone contract or insurance policy may be challenging, as well leasing an apartment.
Though, bankruptcy may be a saving grace if you are...
Bankruptcy does make attempting to collect on your debt out of bounds to your creditors. In other words, they may no longer contact you directly and request payment. Though, they will need to contact the court or your attorney about recovering your debt.
A bankruptcy court ruling will determine whether you will need to pay all your debts, how they will need to be paid, and over what period of time. The details hedge on the type of bankruptcy you file – Chapter 7 or Chapter 11.
If you file for Chapter 7 bankruptcy, your assets can be sold under a court-supervised process. Then, the proceeds are used to pay off your debts, as the court dictates.
If you file for Chapter 13 bankruptcy, you get to keep your property. But you will need to repay your current debt via a court-approved payment plan. The payment schedule typical spans over several years. Funds for payment come from the income you are going to earn over that period of time.
Additionally, state laws vary with bankruptcy filings and their requirements. You should seek counsel from a qualified bankruptcy attorney from your state before making the final decision on bankruptcy and credit car debt.
For in-depth information on filing for bankruptcy, visit the U.S. Court website at http://www.uscourts.gov/FederalCourts/Bankruptcy.aspx
If you have an option to clear your credit card debt without having to resort to bankruptcy, you should definitely consider it because of the long-term impact. Yet bankruptcy can provide you with a fresh start to get your life back on track and financially sound.
For other options versus bankruptcy and credit card debt, please see the articles below.