Credit card debt got you down? Bankruptcy can help.

A bankruptcy filing can wipe out your credit card debt.

America is a consumer society. We make money, and we spend money. Sometimes, however, our spending outpaces our income. This isn't necessarily a sign of frivolity or unwise asset management, nor is it to say that someone with a high debt load is somehow irresponsible with money. There are many different reasons why individuals could find themselves carrying debt that has become unmanageable, including:

  • The huge financial stresses of divorce (having to fund two households instead of one, paying for divorce attorneys, buying new furnishings, etc.)
  • Medical bills piling up following an unexpected accident or illness, or a chronic condition requiring long-term treatment, particularly if there is little or no health insurance coverage
  • Student loans incurred while exploring a new career path or focus area
  • Job loss, layoffs, having hours cut or other income shortfalls

Debt, as you know, can be very stressful, and debt collectors can be relentless. You could be facing creditor harassment that results in multiple phone calls every day, threatening letters, legal action, asset seizure, wage garnishment and more. Some people are so frazzled by the actions of unscrupulous debt collection agents that they simply shut down. They try to ignore the problem and hope it will go away: this approach will not work and often exacerbates the situation.

Regardless of the reason why your debt has gotten out of your control, there may be options to help you get things headed in the right direction again. If you've tried working with your credit card lenders to get new terms or make payment plans and still found yourself over your head, it might be time to seriously consider a bankruptcy filing.

Chapter 7 and credit card debt

Credit card debt is generally considered an unsecured debt. This means that there isn't some form of collateral backing the debt. It also means that it is most often eligible for discharge in bankruptcy. If you file for Chapter 7 bankruptcy, your non-exempt assets will be sold, and the proceeds used to pay creditors. Remaining debts will then be discharged. This means they will be wiped out.

It is important to note that most assets are exempt from sale in a Chapter 7, including personal and work vehicles, household furnishings, clothes, personal items and even the family home. Exemptions vary by state, but a skilled bankruptcy attorney can help you determine which assets would be safe if you choose Chapter 7.

Chapter 13 repayment

Chapter 13 bankruptcy is a little different from Chapter 7. Instead of using your assets as a way to pay your creditors, it involves you agreeing to make monthly payments for a set period, usually between three and five years. At the end of the repayment period, any remaining eligible debt will be discharged.

Only you, working with a bankruptcy lawyer, can determine if bankruptcy is right for you, and which type of bankruptcy best suits your financial situation. There are unique considerations that must be taken into account with each bankruptcy option, and this is not a decision to be made lightly. For advice and guidance, contact bankruptcy attorney Mark T. Young. He has more than 30 years of experience helping people find debt relief through bankruptcy filings. Call his Chattanooga law office locally at 423-933-1606 or toll free at 888-376-0282, or send an email.