From data released from the Survey of Consumer Finances conducted by the U.S. Federal Reserve, the average amount of debt for most families is around $5,700, with 41% of households carrying some form of debt. The average amount of credit card debt for households for those with revolving balances is around $9,300. Even more consistent in this pattern is the some $10,000 in debt carried by those with a household net worth of zero or negative.
It is of no surprise that individuals with the least amount of assets or liquid cash also carry the most debt. While this correlation may not come as a surprise, the fact is that only a fraction of those people will actively work to resolve their debts. Further, an even smaller percentage of those will successfully eliminate their debts and regain financial freedom.
Cracking Credit Card Debt
One tool that can be beneficial for anyone facing serious debt problems is to file for bankruptcy. One of the biggest advantages bankruptcy can provide is protection from creditors and collections. Many people seek bankruptcy relief to stop harassing debt collection calls, halt eviction or repossessions, stop wage garnishments, and prevent some lawsuits.
Further, a bankruptcy can eliminate credit card debt easily. In a Chapter 7 bankruptcy, debtors may be able to have their credit card debts wiped out in a matter of months. However, not everyone is eligible for a Chapter 7 bankruptcy; in which, a Chapter 13 bankruptcy may provide for credit card debt relief through a series of affordable payments to the court.
If you are experiencing problems paying your debts or are crushed by expensive credit card payments, contact our Sacramento bankruptcy attorney office today at 916-459-2364.
There are a few reasons why your credit score may be low. First, you may not have established credit yet. Credit scores are based heavily on your credit history, e.g. loans you have taken, expensive items you have purchased, etc. If you have little or no credit, it will be difficult to have much of a credit score. However, having too much credit can also be bad. If you have high debt balances, have borrowed more than you can afford, or have missed credit payments; chances are your credit score has taken a hit. However, there are a few simple steps you can take to improve your credit.
First, obtain copies of your credit report from all three bureaus. The reason for this is that each of the credit reporting bureaus have unique formulas for calculating credit scores. Therefore, your score may be higher or lower with one bureau depending on the information reported.
Second, review your credit reports from each bureau carefully. There could be discrepancies in what is reported between the bureaus. If you only obtain the report from one bureau, you may be missing information reported to one bureau and not all of them. If you find any errors or misreported information, dispute it in writing to the credit bureau right away.
Third, develop a plan for disputing errors or misreported information on your credit report. Do you have impended lawsuits from a creditor? Have you been contacted by creditors about missed payments and owed debts? Are you concerned about wage garnishment or repossession of assets? If you answered “yes” to any of these three questions: stop and contact a Sacramento bankruptcy attorney right away.
An experienced bankruptcy attorney can halt your credit collections, and stop further damage to your credit report while you work out a plan with the court to resolve your debts.
Wage garnishment is legal order in which your employer is required to deduct money from your salary and wages to be paid to a creditor. Wage garnishment orders can demand portions of your paycheck for resolving debts like spousal/child support, student loan debts or payments due to a credit card company. However, it can only be done after a lawsuit has been successfully filed and ordered by the court. This means that you have a small window of time to develop a plan to resolve your debts before the garnishment order is issued.
The Automatic Stay
One of the fastest paths to stop debt collections against you in any form is to file for bankruptcy protection. In doing so, an order will be issued called the automatic stay. This order prevents further debt collection from being legally levied against you, including a wage garnishment. When in effect, the automatic stay stops all current collection actions and prevents additional collection actions while your debts are being resolved by the court.
The automatic stay in bankruptcies gives you protection from wage garnishment even if you have made a voluntary decision to file for it. You should determine the best way to deal with your debt. If you cannot cover it, it may be a good idea to consult with a Sacramento bankruptcy lawyer.
Credit card debt is a billion-dollar problem in America. Large credit card debt is always a cause of concern for an individual. Thus, a lot of people file for Chapter 7 bankruptcy to remove their credit card debt quickly and with minimal repayment of debts owed.
What are the possible consequences of having credit card debt?
If you fail to pay your credit card debt on time, you could face harassing debt collection calls, bad credit, and lawsuits. For example, missed payments often motivate credit card companies to raise your interest rate. The credit company could also charge late fees for unpaid debt. Sometimes, the credit company could also turn your account to a debt collector. Thus, you should always consider ways to either pay the debt or remove this debt off your card, and filing for Chapter 7 bankruptcy is a good way out.
Why is Chapter 7 filing always a good option?
It is often a challenging task to keep on paying your credit card debt each payment cycle, and on average, it takes over ten years to clear all of an individual's credit card debts. Secondly, if you miss even a single payment or are late to it, then the credit card company raises your interest rates.
In such scenarios where the credit card debt keeps on rising, a Chapter 7 bankruptcy filing is a good option because it always removes almost all of your debts barring a few exceptions. If your debts get out of hand, then Chapter 7 can undoubtedly come to your rescue.
Credit Cards Debt that does not get removed by a Bankruptcy filing
You have to always keep in mind that there are certain transactions that a bankruptcy filing cannot erase. A bankruptcy court could find non-dischargeable transactions, including purchases of luxury items, fraudulent transactions, and payments made for alimony, student debts, and child support.
Contact a Sacramento bankruptcy attorney to find out how you can eliminate your unsecured credit card debt.
A common bankruptcy myth is that filing bankruptcy will ruin your credit for the future. The truth is, many people find their overall credit starts improving following a bankruptcy. While bankruptcy will be recorded on your credit score for up to ten years, it is not the end of the road for obtaining credit. You can slowly rebuild your credit score and return to your financial life before bankruptcy, along with some discipline and patience.
Consider a co-signer
Co-sign with a family member or friend to be qualified for better cards or loans and re-establish your credit much more quickly. When choosing this option, you should sustain an absolute payment record going forward, not only for your sake but also to protect your co-signers credit report.
Maintain the payment of your non-bankruptcy accounts
Do not neglect your other accounts that are not integrated into your bankruptcy, such as student loans. Any active non-bankruptcy accounts will eventually continue to affect your credit score, so try to pay any existing loans on time.
Solicit new credit frugally
A portion of your credit score depends on the number of new credit applications you make. Do not try to apply for various credit card or loan applications at once, especially when you get rejected because you might be seen as desperate for credit. Instead, focus on paying off your existing debts and try applying again after six months or so.
Avoid job hopping
Recurrent job changes will not influence your credit score, although lenders look beyond your credit report while you are applying, particularly after a bankruptcy. Holding many jobs in one year might show that you have issues with discipline or responsibility. You will not be the kind of borrower on whom a lender can rely on. On the contrary, if you have a stable job and you have maintained it for a while, it might be seen as a sign of stability so that it can swing a decision in your direction.
Take the process slowly. Don't be in a rush, so you don't find yourself surrounded by mistakes that will just postpone your credit repair progress. It will indeed take a few years, but you can eventually win back an excellent credit score.
If you would like more information about bankruptcy, contact a Roseville bankruptcy attorney today.
Credit card debt is a significant problem in the United States. Americans owed over a trillion dollars in credit card debt in 2019.
The Credit Card Accountability Responsibility and Disclosure Act of 2009 put federal rules and regulations on the use of debit cards. Financial institutions have lost income due to excessive bank fees no longer being allowed. Consumers must agree to overdraft before they can be charged an overdraft fee.
Encouraging Credit Cards
Banks are encouraging shoppers with great promotion rates, and 0% offers to obtain new credit cards. Banks receive more profit from credit card usage, than from debit cards. If consumers are hooked on credit cards, banks can replace the debit card usage fees in overdraft charges for interest rates and fees on the credit cards.
Cycle of Debt
One of the most common causes of financial issues is credit card debt. It can start a cycle of purchasing everyday items on your credit card when you have run out of paycheck. You tell yourself you will pay the balance at the end of the month, but often only the minimum amount due gets paid.
Bankruptcy can help you eliminate your credit card debt and stop the harassing phone calls and texts and emails regarding your credit card debt. A court order called the automatic stay protects you from any further collection activities while your bankruptcy case is active. If the creditor does not stop collection attempts made against you, you can take them to court, and they may be found in contempt and face penalties.
Contact a Roseville bankruptcy attorney to find out how you can eliminate your credit card debt today.