Credit Card Debt

Credit card debt in the United States was 972.73 billion dollars in 2008 ! Here’s an example that will show you the dangers of credit card debt. If you owe $20,000 in credit card debt, at an interest rate of 25%, you’re paying $5,000 a year in interest alone ! That’s $200,000 over 40 years, or 10 times your original debt, and that’s before late charges and credit card fees. Let’s assume you pay $416 per month, interest charges will exceed your payment, and the principal will NOT BE REDUCED ! You will never be able to pay it all back. For those who are only able to make minimum payments each month, the stagnant or increasing balances, along with increasing interest rates, can make their credit card debt difficult if not impossible to handle and reduce.

We have witnessed many reasons for large credit card debt. Some consumers find themselves in debt because of large, necessary purchases, such as fixing or replacing a car or paying for medical treatments and prescriptions. Other consumers find themselves using their credit card more often after a job loss or a reduction in income. Of course, in some cases, credit card debt is simply the result of overspending. Regardless of the reason for your credit card debt, help is available.

By filing for Chapter 7, you can have a fresh start and be debt free in a few months. In Chapter 13, you can discharge overwhelming amounts of credit card debt, or pay it off with monthly payments over a 3-5 year period. At American Debt Relief, we can help you file for bankruptcy and will advise you on the best options for your individual situation. While filing for bankruptcy is not something that anyone wants to do in their life, it can help those who find themselves trapped underneath the burden of credit card debt. Get yourself off the treadmill that leads to nowhere, and let us navigate you onto the road of a bright future for you and your family.

Rebuilding Credit and Using Credit Cards Responsibly

After your bankruptcy has gone through and your credit card debt has been discharged, it is important to understand that you have been given a fresh start and second chance to make responsible choices in spending and credit card use. Our firm has seen unfortunate cases where people have gone through a bankruptcy, only to be back in debt after just a few years.

To rebuild your credit through responsible credit card use, consider using cash or setting up a debit card to make everyday purchases. If you need to have a credit card, limit yourself to one or two and keep track of your spending on a regular basis. Studies show that people are likely to spend 16 to 18% more with a credit card than they would with cash, and by keeping that money, you can save for emergencies that may arise with a car or medical issue.

By using credit cards wisely and by keeping track of your purchases after you have filed for bankruptcy, you will rebuild your credit faster and you will be more likely to avoid the bankruptcy process in the future.

Managing Credit Cards Prior To Filing Bankruptcy

When you have decided to file for bankruptcy to discharge credit card debt, there are important actions that you can take to help your situation. The most important action that you can take is to stop using your credit cards. This includes taking cash advances from your cards. By using credit cards before a bankruptcy, you can give the bankruptcy court the impression that you are being dishonest in your bankruptcy and are driving up your amount of debt, knowing that you will be discharging it anyway.

You should also stop paying off your credit cards if you decide to file for bankruptcy and do not show favoritism by paying off one debt, while leaving another. These actions could result in a denial of discharge, unwinding of your payments and could prevent the bankruptcy from going through.

At American Debt Relief, we believe that no one should have to deal with the burden of debt by themselves. Our firm is here to provide the legal assistance and the individual attention that will help you with your financial future. Contact Attorney Leonard J. Ackerman today for a Free Consultation!