Credit card debt has a notorious way of sneaking up on someone. It piles up faster than a cardholder seems to spend money. When this debt balloons into the thousands or tens of thousands of dollars, the minimum monthly payment alone can be too much for a person to overcome. Thankfully, there are ways to get ahead of this debt or even eliminate it.
Each year, hundreds of thousands of people file for bankruptcy. These people were brave enough to find a solution to their problem and were able to take their lives back from crippling financial debt. Credit card debt can be managed in two common forms of bankruptcy: Chapter 7 and Chapter 13.
What is Chapter 7 bankruptcy?
Chapter 7 bankruptcy is a form of debt removal in which the applicant can eliminate their credit card debt. In exchange for the government eliminating their credit card debt, an applicant needs to sell any non-essential property (like collectibles or a second car or home) to offset the cost of their debt. After the funds from this sale go towards paying off any applicable debt, the government will clear anything that remains.
What is Chapter 13 bankruptcy?
Unlike Chapter 7, Chapter 13 bankruptcy does not eliminate debt. Instead, this option gives the applicant control over the debt. Through this option, the government consolidates any applicable debt, like credit card debt, and moves the debt into a single monthly payment. This new payment plan is set up to finish within three or five years. This option does not require the applicant to sell any possessions, which makes it an attractive choice for many.
Where do you start?
The first step in determining if bankruptcy is right for you is by speaking with a bankruptcy attorney. Their experience can help decide which type of bankruptcy to choose and complete the bankruptcy application.