Credit Card Debt and Bankruptcy

Do you remember when you got your first credit card? It gave you such a sense of freedom, and yet it was scary at the same time. When you first applied and were approved you swore to yourself that you would never charge more than you could afford, that you’d pay your bill in full every month, and that you would never let yourself get into debt. All of the small print about interest rates meant nothing to you because you didn’t believe that it would ever apply. But now you’re finding that despite your good intentions, your purchases have surpassed your income, and even though you’ve stopped charging, the amount that you’re able to pay back isn’t making a dent, and between the way that interest adds up and the penalty for any missed payments, you may find yourself contemplating bankruptcy.

You’re not alone. The average American household’s credit card debt is estimated at about $15,000. Whether yours is higher or lower and regardless of how things got so out of control, if you don’t see a way to pay off your credit card debt then personal bankruptcy may be the right answer for you. There are two different types of bankruptcy that an individual facing out-of-control credit card debt can apply for: Chapter 7 and Chapter 13.  If you choose to file for Chapter 7 bankruptcy, you will be able to walk away from your credit card debt entirely. Under Chapter 13 bankruptcy, you work wit a trustee to create a repayment plan that gives you more time to pay your debts back – usually between three and five years. Chapter 7 is generally the option chosen by those whose debts are so high that repayment within that amount of time is not likely, or for those whose income is so low that they are unable to pay their debts and still pay for their basic living expenses.

If you are considering filing for bankruptcy to escape from your credit card debt, it is important that you understand all of the rules and regulations regarding what the impact will be on your future ability to apply for credit, as well as for what debt will be able to be discharged. Many people make the mistake of using their credit cards to purchase luxury items or for cash advances before they file: doing so invites trouble. Your credit card company may file an adversary proceeding asking the court to make your recent debt nondischargeable.

You can make sure that bankruptcy is the right option for you, and learn which type of bankruptcy will fit your needs, by talking to an experienced Philadelphia bankruptcy attorney at Jensen Bagnato, P.C. today. We will help you file for relief from your debt, and make sure that your rights are protected and the process goes smoothly.