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Should I file bankruptcy for credit card debt?

Credit card debt can become a headache for anyone very quickly. When it becomes impossible to pay the accumulated sum of consumption on credit, many people resort to paying the minimum. Thus, the only thing that is achieved is to kick the problem for later, since the minimum payment is only enough to cover the accumulated interest on the debt. In other words, with this methodology the capital owed is not reduced, and it may even continue to increase. Without additional income, credit card debt will seem unpayable after a while. That’s why many people wonder if I should file for credit card debt bankruptcy. In this blog post, we will find an answer.

The first thing we must say is that bankruptcy can indeed be a solution to this problem. The bankruptcy process will allow you to get your finances back in order, even in situations where there seems to be no way out. For this reason, many people choose this resource in different situations, not only with credit card debt. So, although it may be a solution, some particular issues must be taken into account in order to make the best decision.

Which item should I file bankruptcy for credit card debt

In principle, we can say that there are two options when filing bankruptcy for a credit card debt. The first is to do it through Chapter 7 of the Bankruptcy Code. This is presented as the best option a priori, since it allows you to erase all credit card debts that are in the name of the person. If you believe that the amount has become unpayable or that you will not be able to honor it on time, filing for Chapter 7 bankruptcy may be a solution. It is the one chosen by most people, who manage to eliminate their debt after 90 days.

On the question of whether I should file for bankruptcy for credit card debt, it should be clarified that Chapter 7 has some requirements. Mainly, the most determining requirement is that of income. In order to apply for Chapter 7, you must have an income that is below the average for the state in which you live. If this is not true, you may need to resort to another solution. For a more detailed analysis of your case, don’t hesitate to contact bankruptcy attorney Michael Brooks.

The second option is to file a Chapter 13 bankruptcy, which is basically a payment plan. When presenting this resource, an installment plan is established that can last between 36 and 60 months, where the debts will be settled. Under this modality, large debt reliefs are not made, but it is a good option for those people who do not have the resources to pay their credit card, but do not qualify for chapter 7. In this case, there is no income requirement .

It is convenient to keep in mind that, in addition, bankruptcy by chapter 13 allows you to maintain the possession of different assets such as houses, vehicles, businesses, etc. In the case of chapter 7, many of these properties will be liquidated to obtain funds that can pay off part of the debts. Then, Chapter 13 can be used strategically to avoid losing possession of these assets.

Tips when I should file bankruptcy for credit card debt

There are some recommendations to keep in mind when filing bankruptcy for credit card debt. A fundamental one is to consider the precise moment to file bankruptcy. It is often the case that credit card debt is not eliminated if the card was used unnecessarily during the 90 days prior to filing. So, a good tip is to wait a reasonable amount of time for that period to elapse before filing for bankruptcy. Of course, at that time it is advisable not to use the credit card again.

This matter may include a credit card claim for fraudulent use. This happens when you have expenses on luxury goods in the 90 days prior to filing bankruptcy. These assets may include home improvements, expensive cars, luxury treatments, or jewelry. However, if the expenses incurred are normal consumption such as gasoline, medical bills, food, etc., the debt will be settled. Always, before deciding one or another strategy to file for bankruptcy, it is recommended that you receive the advice of a professional. Michael Brooks has extensive experience in similar cases, so he will be able to advise you to make the best decision.

Cash advances and bankruptcy: how to avoid problems

Another point to consider when filing for bankruptcy is cash advances. If the authorities discover that you have withdrawn more than $950 in cash in the days leading up to filing, there is a good chance that the debt will not be discharged. This is considered fraudulent behavior and can therefore have very negative consequences for the course of bankruptcy. Of course, this will have to be analyzed on a case-by-case basis. For example, if you withdrew cash to pay off student debt and were later discovered to have a medical condition that prevents you from working, it stands to reason that you can file for bankruptcy. In that case, it will be up to the judge whether the debt is settled or not.

As you can see, the question of whether to file bankruptcy for credit card debt has many factors to consider. The use made of the money and the time elapsed are just some of the factors. It is always better to be prepared before starting a process like this. Therefore, the advice of a bankruptcy attorney in Miami like Michael Brooks can make the difference between a successful and profitable bankruptcy, versus a problematic one.