Credit card debt is an incredibly dangerous form of debt because of how quickly and quietly it can grow. After enough debt has accumulated, the credit card adds more interest than a debtor can pay off. When it gets to that point, it results in an endless cycle of paying off debt that a debtor is no longer contributing to. Is there any way to break this vicious cycle?
The average amount of credit card debt in an American household is over $8,000, but many others have well over that amount. Bankruptcy is commonly known for helping discharge debt, but can it eliminate credit card debt?
What kind of debt can bankruptcy discharge?
There are two forms of debt: secured debt and unsecured debt. Secured debt is a form of debt that has collateral attached to it. Common examples of this debt include mortgages and car loans. Unsecured debt is a form of debt that does not have any collateral, such as credit card debt, medical debt, and debt from utility bills.
Chapter 7 bankruptcy can only discharge unsecured debts, which means that if you qualify for bankruptcy and it discharges your unsecured debt, you will still have the secured debt to take care of. To complete Chapter 7 bankruptcy, an applicant will also need to sell non-essential assets like secondary properties, collectibles and heirlooms, and even retirement accounts. After the money from these sales applies to the debt, the bankruptcy will discharge the remaining unsecured debt.
Act today to secure your tomorrow
The sooner you speak to a bankruptcy attorney about what bankruptcy can do for you, the sooner you can free yourself from a vicious cycle of credit card debt. Asking about what options are available to you is the first step in your best possible future, so reach out to an attorney today.
