Have you found yourself feeling a little overwhelmed by the amount of debt you are carrying and are considering filing for “credit card debt bankruptcy?” Of course, there is no such thing as credit card debt bankruptcy, per se, bankruptcy is just bankruptcy, but having too much credit card debt is a common reason for many folks to consider filing for bankruptcy. Depending on your own unique circumstances, you may indeed be justified in filing, but sometimes you are no better off after filing than you were before.
Why? Well, a few years back, the bankruptcy laws were changed dramatically and it is now much harder to use the bankruptcy system to completely wipe away your outstanding debt – what is known as chapter seven bankruptcy. The process is time-consuming, challenging, and almost always requires the assistance of an attorney who specializes in it. In fact, your income may not allow you to even file for chapter seven; if you make a certain amount of money – usually more than the median income for people in your state – you are not eligible for chapter seven and must file chapter thirteen.
Chapter thirteen bankruptcies are not a “bad deal” necessarily, but they may be. Essentially, a chapter thirteen will simply end up as a court-ordered restructuring of your debt, so now if anything happens and you have to miss a payment for some reason, you are breaking a court-ordered payment. Of course, it is almost impossible to miss a payment, as the most frequent result of chapter thirteen is that the judge assigns your case to a trustee who takes over the duty of making your payments for you, after he/she renegotiates with creditors and most likely reduces your interest rate, deletes any outstanding service charges, does away with annual fees, and probably even reduces the total amount owed to a lesser amount.
Of course, chapter thirteen filings do have the same negative impact on your credit score as chapter seven bankruptcies do; therefore, your debt is not gone, you still have to pay a rather large sum every month, and your credit score is reduced just like those who file chapter seven.
If your credit card debt is just way out of your ability to pay range, bankruptcy may be your best option, but before you declare “credit card debt bankruptcy,” be sure to determine if it is your best option.