Are you facing bankruptcy because you can’t pay your credit card debts? Keep in mind that credit cards are loans; money charged on them must be paid, and if you don’t pay the full balance due on your monthly statement, you will also pay interest, often at a high rate. Credit cards are not free money, and overuse or other abuse of them can cause you to get into so much debt that your only way out is to file bankruptcy.
The best way to use credit cards is as you would checks. Don’t buy anything with them that you would not ordinarily buy, and make sure to pay the full statement balance each month. If you do this and you don’t have other financial problems, you will not get into trouble by using credit cards and you will not pay any interest for using them.
Sometimes you might want to use a credit card as a loan for things like replacing your washer and dryer, which might cost more than you can afford or want to pay in one lump sum. There are companies and banks that offer 0% interest credit cards for limited periods of time (usually 12-18 months), and you won’t pay any interest so long as you make at least the minimum monthly payments on time and the borrowed amount is paid in full within that time. This only works if you are able to make monthly payments that are high enough to have the balance paid in full before the 0% interest rate expires, so don’t do this if you can’t afford to make those payments. It is not a good idea to use credit cards as loans except for these 0% loans. Most credit card interest is very high, and you can probably get a lower rate by financing with the seller or getting a loan from your credit union or bank if you cannot get a 0% temporary interest credit card.
If you are unable to pay your debts, there is a good chance that bankruptcy is your only affordable solution. If credit card and other unsecured debts like doctor & medical bills are your debt problems, chapter 7 bankruptcy would be your best solution, because you will pay nothing to for those unsecured debts and they will be discharged in the bankruptcy. However, chapter 7 bankruptcy has what amounts to income limits, so if you make too much money, chapter 13 would be the only bankruptcy available to you. Chapter 13 bankruptcy is equivalent to debt consolidation, except that it is overseen by the bankruptcy trustee and the bankruptcy court, and it gives you certain legal protections against your creditors that you do not get from private debt consolidation companies. You would make monthly payments to the chapter 13 trustee for 3-5 years to pay a percentage of what you owe, determined by your monthly disposable income and how much of your property you can exempt in bankruptcy.
If you have so much credit card debt that you cannot pay it or that it might keep you from paying other bills like rent or mortgage, or car payments, contact a bankruptcy attorney today. Try not to let your credit cards get you into bankruptcy. But if you’ve fallen too far behind in your debts to catch up, bankruptcy might be the right solution for you.