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You are not alone if you owe credit card debt. Americans owe $1.14 trillion in credit card debt. High interest rates, late payments, and other fees make it almost impossible to repay credit card debt if you fall behind. Keep reading to learn steps you can take if you fall behind on credit card payments, including filing for bankruptcy relief with the help of a Massachusetts bankruptcy attorney.
What Happens When I Fall Behind on Credit Card Payments?
Credit card companies charge a late fee if you do not make the minimum payment by the due date. They also report past-due credit card payments to the credit bureaus, which lowers your credit score. Sometimes, the credit card company can increase your interest rate if you fall behind on credit card payments.
If you remain behind on credit card payments, the company may turn the debt over to a collection agency. The debt collector may harass you for payment. Eventually, the credit card company may sell the debt to a debt collector. The company or the debt collector could file a debt collection lawsuit seeking a personal judgment for the debt. In Massachusetts, a judgment creditor can ask the court for a wage garnishment order to collect the debt from our paycheck.
What Can I Do if I Am Behind on My Credit Card Payments?
You have several options if you fall behind on credit card payments. You can apply for a new credit card with a zero interest rate for the first year. All payments go to the debt you owe instead of interest. You may also apply for a consolidation loan to consolidate the credit card debt and other debts into one lower monthly payment. These options only work if you can repay the debt without falling behind again.
Another option to repay credit card debt is to make an offer to settle the debt. Debt settlement is a lump sum payment of a percentage of the amount you owe. For example, you offer to pay 75% of the credit card debt in one payment. The credit card company forgives the remaining balance in exchange for the payment. You must have the funds to pay the settlement amount, and the forgiven amount may be counted as income for tax purposes.
Filing Bankruptcy to Get Rid of Credit Card Debt
It is easy to fall behind on credit card bills. An accident or illness may prevent you from working for a few weeks, causing you to fall behind. Losing your job or experiencing a reduction in income can cause you to miss a few payments.
Filing bankruptcy can get rid of the credit card debt and give you a fresh start. When you file Chapter 7 or Chapter 13, credit card debt is subject to a bankruptcy discharge. When you complete your bankruptcy case, the credit card debt is discharged. Creditors cannot try to collect a discharged debt. Therefore, you do not have any legal obligation to repay the credit card company.
Get Help With Debts You Cannot Pay by Filing Bankruptcy
Filing for bankruptcy may be the best solution to your debt problems. Contact Logan A. Weinkauf, P.C., to schedule a consultation with a Massachusetts bankruptcy attorney to discuss how bankruptcy can help you get rid of credit card debts and other bills you cannot afford to pay.