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Chapters 7 and 13 bankruptcy can help with credit card debt

Credit card debt can be scary. Those who relied on them in a time of need can quickly be subjected to creditor harassment and even wage garnishment. In many cases, these debtors had no choice but to turn to credit cards. Unemployment, a sudden decrease in wages, a new medical condition, or another unexpected life event can leave them strapped for cash with nowhere to turn but their plastic. Though they may not have had an option in doing so, they do have options when it comes to finding debt relief.

Those facing financial challenges and struggling to make minimum payments may feel completely overwhelmed. Fortunately, these individuals can often find debt relief through the U.S. Bankruptcy Code. By filing for bankruptcy, individuals with credit card debt can stop wage garnishment and creditor harassment while getting their financial life on track. When it comes to bankruptcy, there are two paths individuals can take.

The first is Chapter 7 bankruptcy. This type, sometimes known as liquidation, typically allows debtors to shed debt by selling assets to pay off secured debts, then discharging unsecured debts, such as credit card debt, if they cannot be paid. This type of bankruptcy also halts wage garnishment and stops foreclosure proceedings. Chapter 7 is a great way for individuals to find financial relief and a new financial start, many cases in a matter of months.

The second option is Chapter 13 bankruptcy. Through the Chapter 13 process, debt is reorganized to give the debtor more manageable payments. These payment plans may last for several years, but they may allow an individual to pay back debt at a lower interest rate, saving them a significant amount of money. In Chapter 13, it is also likely that a debtor will get to keep his or her property.

When delinquent payments mount up, it may be time to consider debt relief options. By speaking with a Tennessee bankruptcy attorney, debtors can learn of their legal rights and how to best act on them in their best financial interests.

Source: Nerd Wallet, "Options For Declaring Bankruptcy on Credit Card Debt," July 1, 2014

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Mark T. Young & Associates
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Hixson, TN 37343

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