CREDIT card debt is the most troubling financial problem for a lot of people today. Currently there are over 23 million people in this country who can’t even afford to pay more than the minimum on their credit cards. And of course, if you pay no more than the minimum, you’re certain to be in debt for a very long time.
Every day, I meet people who owe so much on their credit cards that they will never pay off what they owe in their lifetime. These are the people who live paycheck to paycheck with no savings because a big chunk of the money they make just goes to paying their credit cards every month. One day, they will retire and will be shocked to realize that they have not saved a penny for their future and that their social security check won’t even be enough to pay rent.
Credit cards can become a life-saver for emergencies, but they also come back and haunt a lot of people. If you find yourself in a situation where you’re just way in over your head, perhaps the thought of filing bankruptcy has crossed your mind. I know that this is not easy decision and perhaps you are concerned about the ramifications of a bankruptcy filing. I understand. I tell all my clients that bankruptcy should always be a last resort because if you can afford to pay your debts, that is, of course, your legal obligation to do so. But what if you’ve done your best but it is still not good enough?
Again, filing bankruptcy might be the best solution for you if you have ran out of options. This makes sense if your credit card debts are beyond your ability to pay. It’s even worse if your accounts have been turned over to collections and you have bill collectors calling you night and day. By filing for bankruptcy protection, all debt collection attempts are legally halted. Creditors will no longer be able to call you, send collection letters, or even call you. Once the Court has decided in your favor to either wipe out or consolidate your debts, creditors are legally bound to accept the decision and can’t bother you anymore.
Briefly, Chapter 7 bankruptcy can wipe out credit card and other debts that you can no longer pay, with the exception of most taxes, back child support and student loans. Chapter 13, on the other hand, is a 3-5 year repayment plan which allows you to consolidate all your bills into one affordable monthly payment. You pay zero percent on your credit card debts and in most cases, a big portion of what you owe is also eliminated. If you are in foreclosure, Chapter 13 can also help you save your home by helping you get back on track with your lender by including all your back mortgage payments, property taxes, HOA fees, etc. in your repayment plan. If you are currently trying to do a loan modification, I suggest that you also find out what bankruptcy options are available to you should your loan modification application be denied. If you have more than one mortgage on your property (example: you have a 1st and a 2nd mortgage), and the current market value of your property is less than the amount of the 1st mortgage, you may be able to "strip off" the 2nd mortgage and completely eliminate or significantly reduce the underlying debt amount. This is possible in Chapter 13 but not Chapter 7. Consult with an experienced and knowledgeable bankruptcy attorney who can explain to you how this works.
If you need help in figuring out your options, please call toll-free 1-866-477-7772 to schedule a free consultation. We have offices in Glendale, Cerritos, West Covina and Valencia.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 4,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1-866-477-7772.
( Published May 26, 2010 in Asian Journal Los Angeles p. B2 )
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