The Federal Reserve reported that during the fourth quarter of 2013, consumer credit outstanding increased by an annual rate of 6.5 percent on a seasonally adjusted basis. In December alone, it increased at a 7.25 percent annual rate. The average American household has $15,270 in credit card debt and many Americans are struggling to repay what they owe. Speaking with one of our professional bankruptcy attorneys is the best way for you to eliminate your unsecured debt and keep your property!
Getting into debt is easy: simply spend more than you can afford to repay each month. Getting out of it is another story. Try as they might, many people are unable to make a dent in the principal balances of their credit card accounts. All of their money goes toward high credit card interest rates, late fees, and other superfluous charges.
Chapter 13 Bankruptcy Can Erase Credit Card Debt!
Faced with a credit card balance that never seems to decline, people become frustrated. Some give up, choosing to ignore monthly credit card bills. Others go to extremes, selling their possessions for less than value just to free up some money. There is a happy medium and it is called debt management. Bankruptcy is one way to get debt under control and for those with high-priced assets, Chapter 13 is usually preferred.
While Chapter 7, another type of bankruptcy, wipes out many credit card balances, Chapter 13 bankruptcy reorganizes debts in order of priority and extends their repayment periods. Giving debtors three to five years to repay their credit card balances makes it financially feasible to become debt-free. Many Chapter 13 filers are not forced to repay their credit card debt in full, making this option more attractive.
When debts are prioritized during a Chapter 13 case, most credit card balances fall at the bottom of the priority list. They are considered general unsecured debts, taking lower priority than secured debts such as car loans and priority unsecured debts such as past-due spousal or child support. The amount of credit card debt that must be repaid varies by case and is based on how much the individual can afford to repay.
There are some exceptions to the low priority placed on credit card debt. Some of this debt may be secured, giving it the same priority ranking as other secured debt. A bankruptcy attorney can help individuals identify how their credit card balances are classified and develop a Chapter 13 repayment plan that satisfies creditors without financially overburdening filers. This professional assistance makes filing for bankruptcy a relatively simple way to become debt-free. Get a free bankruptcy consultation today!