Millions of Americans struggle with debt. This is nothing new, but in modern times, we face a problem that previous generations never had. People are drowning in credit card debt.
Are you struggling with credit card payments? Filing for credit card debt bankruptcy may be the best choice. Here’s how the process works and why getting a Wisconsin bankruptcy attorney might help.
Bankruptcy and Credit Card Debt
The many bankruptcy laws in the U.S. are divided into chapters. Each chapter describes a specific kind of bankruptcy.
Chapter 7, or liquidation, bankruptcy lets you sell, or liquidate, your assets to raise enough money to pay off the creditors.
Chapter 13, or reorganization, bankruptcy is where you work with your creditors to come up with a repayment plan.
Choosing Your Strategy
Which bankruptcy chapter is best for handling credit card debt? The size of your overdue bill, your employment status and other factors might force you to pick one or the other.
The laws can make things confusing. For instance, Chapter 13 is designed for people with enough income to repay their liabilities gradually. At the same time, it’s restricted to people whose debts fall below maximum limits.
Chapter 7 is the most common form of bankruptcy. As with Chapter 13, there are eligibility limits, but they apply to your income. Talking to a lawyer could make it easier to navigate these rules properly.
Putting Credit Card Debt Into Perspective
How big is the U.S. credit card debt epidemic? In late 2018, NerdWallet reported that these liabilities topped out at more than $420 billion. That’s a lot of money to owe, and almost 10 percent of people surveyed thought they’d be stuck with credit card debt for the rest of their lives.
Credit card debt that balloons out of control isn’t uncommon. The NerdWallet study also found that households with credit card debt typically had an average of $6,929 in revolving balances. Combined with the huge interest rates that most credit cards charge, these sums have the potential to ruin people’s lives.
Is Bankruptcy the Best Option? Dispelling Common Myths
Filing for bankruptcy under Chapter 7 or Chapter 13 doesn’t mean losing all of your possessions. Most necessities are exempt, and the idea isn’t to fill your life with hardships anyway. Instead, it’s all about making it easier for you to bounce back.
Credit card debt bankruptcy doesn’t ruin your credit either. If you’re considering filing, then it’s likely that the credit rating damage has already been done. Petitioning the bankruptcy court to help you resolve your credit card debts is the most logical option. It wipes the slate clean and moves you toward greater financial responsibility.