If you were able to completely eliminate credit card debt, how different would your life be?
Learn how many of our clients who were unable to keep up with their minimum payments due to increasing interest rates and other unreasonable fees got the relief they needed with the help of a credit card debt attorney in Dallas, Texas!
Credit card debt can interfere with your ability to pay for everyday expenses and to move forward with your life. This debt can be crushing and cause major distress. Imagine a life in which you don’t have any credit card debt. Wouldn’t that be great? Wouldn’t you love to eliminate credit card debt and everything that goes with it?
With Chapter 7 bankruptcy, you may be able to completely erase all of your credit card debt and get out from under that crushing debt. Here is what you need to know about how Chapter 7 bankruptcy and credit card debt.
The Effect of Too Much Credit Card Debt
Many people turn to credit cards to help them out of emergency situations, like a medical crisis or car problems. However, if another crisis occurs or there is a sudden job loss, people can get behind on their credit card payments.
Debt collectors can be relentless and often have little concern for your current situation. They may start charging a higher interest rate, further worsening the situation. They may also add more fees, like late payment and over-the-limit charges. Before long, you can’t meet the minimum payment, let alone pay any meaningful amount toward the debt to get out from under it. Whatever small amount you can pay will hardly affect the balance and will just go towards these higher interest rates and fees.
The credit card company might turn the debt over to a debt collection company that relentlessly harasses you for payment. If they do not quickly collect the debt or you go a few months without making payments, the company might file a debt collection lawsuit against you.
Many debtors fail to respond to such lawsuits, which often results in a default judgment against them. A default judgment gives the complaining party the relief they requested. In the case of debt collection lawsuits, this often includes the payment of attorney fees, court costs, and collection costs. All this means over more money that you can’t afford to pay to the creditor.
Once the creditor has a judgment, it can take collection efforts to get the money it’s owed, such as:
- Garnishing your wages
- Placing a lien on your real property
- Seizing personal property
- Garnishing bank accounts
Additionally, interest continues to accrue while the judgment goes unpaid, so you will owe even more money.
How Bankruptcy Can Help If You Have a Lot of Credit Card Debt
The situation described above doesn’t have to be the only possible outcome. You can prevent many of the actions described above from happening at all by filing bankruptcy. If you are only paying the minimum amount toward your credit card debt, it may take you 10 to 15 years to pay off the debt, depending on the balances and interest rates. This can cost you thousands of dollars in the long run.
With Chapter 7 bankruptcy, you can eliminate credit card debt from your life and get a fresh start. With a discharge of debts, you can get your financial bottom line back in the black. It is even possible to keep certain secured debts like your car, furniture, and house with a “reaffirmation agreement.” Therefore, you can get rid of credit card debt while protecting our property.
You will get immediate protection from creditors. Once you file for bankruptcy, an automatic stay will be issued that prevents your creditor from taking any further collection effort. This stay will also prevent your creditors from calling and harassing you. It can also help you to keep the wages you earn after the filing date. In a short amount of time, your debts will be completely discharged.
Some people are worried about the impact bankruptcy will have on their credit. While it is true that a Chapter 7 bankruptcy stays on your credit report for 10 years, the effect of bankruptcy fades over time. If you get behind on credit card payments, this can negatively impact your credit score because your credit utilization ratio may be high. A single late payment can significantly impact your credit.
Additionally, it may be easier to get new credit than you think. Creditors know that you can’t file for bankruptcy again immediately after a bankruptcy, so they may be more likely to extend you credit than they would before you sought bankruptcy protection.
Debt That Can Be Discharged in Bankruptcy
Many types of debt can be discharged in bankruptcy. Credit card debt is one of the most common types of debts that are discharged in Chapter 7 bankruptcy proceedings.
Most credit cards are unsecured, meaning that there is no asset attached to them like a house or financial deposit. If you default on your mortgage, the creditor can take your home. With unsecured debt, the creditor cannot foreclose or repossess your property. However, they can still seek a judgment against you and try to enforce that judgment through collection efforts.
To avoid this, you may choose to file bankruptcy on your credit card debt.
Other types of debts that are eligible for discharge in Chapter 7 bankruptcy include:
- Medical bills
- Overdue utility payments
- Personal loans
- Personal judgments
- Old rent or lease payments
- Some old income taxes
Therefore, Chapter 7 bankruptcy may be able to eliminate credit card debt and many other types of debts. In fact, when you file bankruptcy, you cannot simply isolate one type of debt (like credit card debt or medical debt). Instead, you must list all your debt in the bankruptcy papers.
Qualifying for Chapter 7 Bankruptcy Protection
The power of a Chapter 7 discharge is significant, so the government wants to make sure that only people who are truly in financial distress and cannot afford to repay this debt. There are two ways to show that you qualify for Chapter 7 bankruptcy.
First, you can show that your income is below the median income for other Texas households of the same size.
The 2021 annual median income for households in Texas are as follows:
- $52,953 – A household of one
- $71,287 – A household of two
- $77,110 – A household of three
- $89,196 – A household of four
If your income is above the median income, you may still be able to qualify for chapter 7 bankruptcy if you have deductible expenses and very little or no disposable income. There are very specific rules regarding which expenses are deductible and how much you can deduct for each expense. An experienced bankruptcy lawyer can help determine if you qualify for bankruptcy.
An Experienced Credit Card Debt Attorney in Dallas, Texas Can Help You Achieve Financial Freedom
Warren & Migliaccio LLC provides legal services and counseling to clients considering filing Chapter 7 bankruptcy. We take personal responsibility and accountability for each client as we guide them through the process towards a customized debt solution and understanding the advantages and disadvantages of filing bankruptcy. If you are searching for a credit card debt attorney in Dallas, Texas, look no further.
Our attorneys have helped hundreds of clients painlessly eliminate credit card debt and return to financial freedom. These clients have broken free and have gone on to get new car loans, new mortgages, and even new jobs. We understand your rights and want to help you make the best decisions for your specific situation. Call us today for a free case evaluation to find out if bankruptcy is right for you: (888) 550-7382.