Question: What exactly is credit card bankruptcy?
Answer: There is no distinction between credit card, car loan, or home mortgage bankruptcy. Filing for bankruptcy can be a legitimate option when you are unable to pay your debts.
While that may sound great at first, there is nothing great that comes from filing bankruptcy.
"Money was never a big motivation for me,
except as a way to keep score.
The real excitement is playing the game.”
- Donald Trump |
Bankruptcy should be avoided at all costs, and yet people continue to think of it as an easy option because they do not understand fully the consequences of this action.
Many people automatically think that filing for bankruptcy will solve all their money problems. They mistakenly believe that bankruptcy will erase all their debts, thus allowing them to forgo any more payments on accounts such as credit cards and various loans. They also believe it will give them a clean start as a debt-free individual.
WRONG! The real story is much different. Bankruptcy comes in several forms and ultimately your filing has to be approved by a bankruptcy judge who will assess your financial situation in great detail.
Filing for bankruptcy informs your creditors that you do not have the necessary funds in order to pay them off as scheduled – but you still have to pay them what you can by selling certain assets you own.
In most cases, your debts will not be entirely waived. Instead, a payback plan will be worked out, usually with reduced payments. In the end, you may still be held accountable for the debt. Other important bankrupcty facts are that creditors who hold secured debt are always paid before the unsecured creditors.
As a result, credit card bankruptcy creditors tend to be last in line.
People often think that they can file for credit card bankruptcy in order to get a fresh start, but it will typically hurt you more than it will help you.
Personal bankruptcy of any kind, credit card bankruptcy or not, will remain on your credit report for a minimum of 7 years. That means 7 years from now when you try to open a credit card account, the lender will examine your credit report and most likely decline your application based on your poor credit rating.
Filing bankruptcy places a huge black mark on your credit worthiness. Consumer bankruptcy makes you a larger risk in the eyes of lenders and can make it very difficult to obtain a car loan or a new home in the future.
When seeking bankrupcty help, be aware that not all credit accounts can be included when filing for bankruptcy. Items such as student loans, alimony, child support and back taxes are not “bankruptable”. So if you owe $20,000 in student loans, bankruptcy will not help in repaying it. Uncle Sam always gets his money back some way or another.
Beware of any bankruptcy Attorney that you go to for advice. Their business is to file bankruptcies cases – it’s in their best interest to convince you to file for bankruptcy. Talk to a professional who doesn’t have a horse in the race, meaning they do not get paid based on you filing for bankruptcy protection.
Get an honest opinion from a knowledgeable professional who has the heart of a teacher, someone who actually cares about you and understands your financial circumstances.
Most people can get through their debt problems if they address the poor spending behavior that got them in the situation to begin with. Examine your spending habits, savings habits, and reduce and eliminate the number of credit cards in your wallet.
Follow the advice provided at this website, specifically - take advantage of our 10 Steps to Conquer Debt eCourse and in a few weeks or months you will be back on track and thanking your lucky stars you didn’t file for bankruptcy.
"Everyone who got where he is
had to begin where he was.”
- Robert Louis Stevenson |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
