New York City Bankruptcy and Credit Card Debt Attorneys
As many people reassess their financial state early in 2013, some will decide it’s time to consult with New York City bankruptcy and credit card attorneys to solve debt problems. Credit Card Debt causes bankruptcy, and bankruptcy can be the right solution to a financial dilemma, when payments on bills owed outnumber a person’s ability to make those payments. For some, Chapter 7 is the best option, while others may find that Chapter 13 bankruptcy meets their needs better. Your attorney will examine your financial state and help you determine what the best course of action is to clear up your debt problems.
Credit Cards and Bankruptcy
Many people place the blame for a rising number of bankruptcy actions squarely on credit cards. The truth is that many of those in debt did not abuse their credit cards or live an extravagant lifestyle on borrowed funding. Credit card companies do encourage use of their cards, however. As you approach a credit limit, they often will extend that limit several hundred dollars higher. If you do not pay down your balances and keep spending more, you will soon discover that you owe hundreds or thousands of dollars on that card.
Reasons for excessive credit card debt are many, including job losses, illnesses, divorce and other hardships. As credit card minimum payments increase because you are not paying the cards off, what you need to pay each month could easily exceed your income. Then, with late payments, you are assessed high penalty fees and possibly even higher interest rate hikes.
Bankruptcy Discharge of Credit and Charge Card Balances
With bankruptcy, you have a chance to start over with a clean slate for most debts. You are able to discharge, or eliminate, many debts owed. Most credit card or charge card transactions are unsecured. This means there is nothing to back up that debt as collateral that might be reclaimed by the creditor. With bankruptcy, your debt is erased and no assets can be repossessed if the debt is unsecured. At the same time, all collection efforts by that creditor must cease when your bankruptcy documents are filed.
Chapter 7 and Chapter 13 Bankruptcy
Two types of bankruptcy are the most frequently used by many consumers and businesses.
- Chapter 7 is available to individuals and it offers discharge of unsecured debt. You are not expected to return anything you bought with that credit.
- Chapter 13 is often used by small to medium businesses. They are able to restructure their debt or conduct a liquidation to raise funds to pay creditors. Payments are now based on your disposable income under this plan. When the plan ends, any remainder of unsecured debt is discharged. With this plan, creditors gain something rather than nothing. Many will receive payment of about half the debt owed.
Common Bankruptcy Questions & Answers
- How long must I continue to pay for debts? When you file bankruptcy documents, you no longer must make payments.
- I had to use credit for food and necessities, can I still file bankruptcy? Some charges may be discharged if they were made within 60 days of filing, but only for necessities and not major purchases or cash advances.
- Must I include all credit accounts? You need to list all your creditors except any that are fully paid off.
- Is bankruptcy included in state laws? Bankruptcy is under federal court jurisdiction and is handled by federal district courts.
- You cannot file for Chapter 7 bankruptcy again within an 8 year period. This means you are “safe” and may receive new credit offers quite soon after your filing is recorded.
- Under Chapter 13 bankruptcy, businesses can work with creditors to set up payment plans or to liquidate property to pay bills.
Reestablishing Credit after Bankruptcy
You benefit from a fresh start after bankruptcy and may want to be very careful in reestablishing new credit accounts. Learn about budgeting and money management so your situation remains under control in the future. It is important to limit use of credit cards to avoid a second bankruptcy in a few years. You may need to find additional income or change spending habits. Use of a budget is very helpful to many people as is knowledge of how much you owe at all times.
The worst thing to do following bankruptcy is to get trapped by the same money habits that got you into trouble in the first place. Credit accounts are ideal for making large purchases, such as a vehicle or home, but they are not the best idea for general living expenses such as food purchases.
If you are having difficulty making monthly payments, it is time to take a closer look at your finances. Consult with your New York City bankruptcy and credit card debt attorney whenever you have questions about your credit card debt problems. Call now to get bankruptcy relief from your debt dilemma.