Credit card debt can quickly become overwhelming, affecting your financial well-being and overall quality of life. You pay one credit card bill and another pops up. If you find yourself drowning in credit card debt with no viable solution in sight, filing for bankruptcy may offer a fresh start. In fact, overwhelming credit card debt is a top reason why people file bankruptcy in New York.
Let’s explore how bankruptcy can help with credit card debt, providing you with an understanding of the benefits and considerations. The next step is to schedule a free consultation with The Law Office of William Waldner to determine if bankruptcy is right for you.
One significant advantage of filing for bankruptcy is the automatic stay. Once you file, an automatic stay is implemented, which immediately halts all collection efforts by creditors, including those related to credit card debt.
An automatic stay provides a temporary respite from collection calls, lawsuits, wage garnishments and other aggressive tactics used by creditors. At the very least, it gives you some breathing room to determine your next best steps.
Discharge of Credit Card Debt (Chapter 7)
Chapter 7 bankruptcy allows for the discharge of most unsecured debts, including credit card debt. In a Chapter 7 bankruptcy, the court can eliminate your obligation to repay credit card debt, providing you with the opportunity for a fresh financial start. It even discharges overdue and late fees.
However, it’s important to note that certain types of credit card debt, such as debt incurred through fraud or large luxury purchases shortly before filing, may not be dischargeable. A bankruptcy attorney can help determine which debts are dischargeable and which are not.
Other dischargeable debts include medical bills, past-due utility balances, auto accident claims, past-due rent, old tax penalties and personal loans from family, friends and employers. Debts that cannot be discharged are child support, spousal support, student loans, judgments from damages caused by drunk driving and most unpaid taxes.
Repayment Plan (Chapter 13)
If you opt for Chapter 13 bankruptcy, you may be able to create a manageable repayment plan for your credit card debt. Through Chapter 13, you can consolidate your debts into a structured repayment plan spanning three to five years. This allows you to make affordable monthly payments based on your income and expenses, helping you regain control over your finances.
Reduction of Total Debt Burden
Bankruptcy can significantly reduce your total debt burden, including credit card debt. By eliminating or restructuring your credit card debt, you can free up resources, allowing you to focus on rebuilding your financial stability.
Opportunity for Financial Education
As part of the bankruptcy process, you may be required to undergo credit counseling and financial educationcourses. These programs are designed to teach you the knowledge and skills necessary to make sound financial decisions in the future.
We realize that most people don’t look forward to taking these classes, but they offer a lot of great information! By gaining a better understanding of budgeting, money management and responsible credit usage, you can avoid falling back into the cycle of credit card debt.
While bankruptcy has a temporary negative impact on your credit score, it also provides an opportunity for a fresh start in rebuilding your credit. Once you have successfully completed the bankruptcy process, you can begin to rebuild your credit history.
One of the best ways to do this is by establishing positive financial habits, such as making timely payments, keeping credit utilization low and being diligent with your financial responsibilities. Over time, responsible credit behavior can lead to the gradual improvement of your credit score, perhaps even faster than if you hadn’t filed bankruptcy.
Schedule Your Free Bankruptcy Consultation
If you are drowning in credit card bills, bankruptcy may be the lifeline you are looking for. Whether through the discharge of debt in Chapter 7 or a structured repayment plan in Chapter 13, bankruptcy can help you regain control of your finances.
Make sure that you work with an experienced and reputable bankruptcy attorney in New York who will guide you through the process and ensure your best needs are met. The Law Office of William Waldner offers free consultations, so it costs nothing to speak with our lawyer. We’ll review your situation and determine if bankruptcy is right for you.