Bankruptcy Credit Cards

Archive for December, 2009

We all know how credit card debt can creep up on us. The credit card companies are only too happy to put that plastic in our hands and then the next thing you know, you are being hit with interest on the balances and late payment fees. This just adds to the already high debt and makes it more difficult to get out of. What a vicious cycle.

One of the best ways to get out of credit card debt is to start paying it down weekly instead of monthly. There are many advantages to this. It is easier to clear out your balance as you incur it weekly. Interest will not accrue as much since the balance that interest is charged on is lower. A smaller weekly payment will seem less daunting to pay than the larger monthly one.

Another very good way to get your credit card debt under control is to seek the advice of the Consumer Counseling Center of America. This organization is a non profit organization that seeks to assist people with serious debt problems. A credit counselor is assigned to the consumer and he Will review all of the outstanding debt of the consumer and work with the consumer on preparing an “action plan” to reduce and eventually eliminate the debt. As part of their duties, they will contact the creditors to negotiate more favorable interest rates and repayment schedules. CCCA will also help the consumer to bring past due balances up to date and work with the consumer to keep them current, settle the most overdue accounts and contact collection agencies to stop the harassment.

But the only real way working with CCCA and agencies like this is for the consumer to start practicing strict financial discipline. Any one who has large credit card debt must break the plastic habit. The plans the counselor sets up will not work if the consumer continues to shop and pile on the debt. What is usually adviced is that all credit cards are destroyed except one that can be kept in case of emergency.

If possible, the credit card balances should be transferred to the credit card that has the lowest interest rate. If zero percent offers are received, they should be taken advantage of. When used properly, they can cut debt quickly; just be careful that you don’t get caught with a high percentage loan after the introductory period.

Be wary of any company that promises it will slash your credit card debt, for a small fee. Many, many people have been stung by these credit repairers or so called credit doctors. Make sure you know the background of any credit counselor you decide to work with.

You, and only you can reduce your debt. Make a budget with a reasonable spending limit, make sure you stick to it and stop credit card use. You will be very happy once you are credit card debt-free.

Peter J. Wilson
http://www.articlesbase.com/finance-articles/take-advantage-of-credit-card-debt-counseling-and-get-rid-of-your-debt-96231.html

When people are so deep into debts and they have absolutely no chance of paying them off then as a last resort they file for bankruptcy. However this is often considered a taboo subject and there are many misconceptions floating around. Some of the myths associated with bankruptcy are:

Myth 1: Everyone will know
People believe that as bankruptcy is a part of your public record every person will get to know about it. However this is far from the truth. No one is so bothered to check. Generally only your creditors and those you tell about your financial condition will know.

Myth 2: I’ll lose everything
Far from losing things you own, bankruptcy may actually enable you to retain them. You will merely have to diligently continue the payments on your house or vehicle and compensate for the missed payments.

Myth 3: I’ll never be able to buy anything again
No doubt bankruptcy, affects your credit drastically, however once in this situation you will also be flooded with credit offers either by secured cards or from sub prime lenders. The only downside is that these loans come at exorbitant interest rates. You will now need to avoid the mistakes you made in the past and improve your credit history. This can be done by paying off these loans punctually.

Myth 4: It is hard to file for bankruptcy
Filing for bankruptcy is not a tedious process. With the help of a good attorney just about any person can do so. They are experts at finding the loopholes and if not through Chapter 7 they will ensure you get file it through Chapter 13.

Myth 5: You can only file once
Filing more than once, for bankruptcy is not suggested. This means that the strategies you are using to handle your finances are not working effectively. It will be advisable to seek good professional help to get you out of this situation.
However the law allows it, although with certain restrictions. You can file for Chapter 7 bankruptcy only once every eight years. You can file a Chapter 13 once every two years. If you have filed a Chapter 7 and now intend on filing a Chapter 13, you can do so only after four years.

Myth 6: The only reason to file is to get out from under the responsibility
People are under the misconception that only people who shirk their responsibility to pay the loans back file for bankruptcy. However, it is actually filed by people who are so deep into debts that in spite of trying for years they cannot get out of it and the debts are accumulating. Also, people experiencing a divorce, loss of job, etc are often bankruptcy seekers.

Jay Moncliff
http://www.articlesbase.com/finance-articles/some-myths-about-bankruptcy-122215.html

Credit card debt can be a horrendous monster to anyone at any time. It attacks us all equally, whether we are some sort of professional or simply a college student trying to make their way through college. Credit card debt for students is certainly not uncommon. Fortunately, since most college student credit cards have much lower credit limits, it isn’t likely that their debt will rise to the same amount that a non-student’s might. The flip side to this, unfortunately, is that college students are generally already burdened with debt that they’ve accumulated due to student loans and so the college student credit card debt can become quite difficult to manage. This compounds the amount of debt that a student must pay back once they are finished school and makes the situation much more stressful.

Another unfortunate occurrence is that since college students are generally inexperienced with regards to the usage of credit cards, they easily slip into debt. In fact, this is exactly the reason behind most financial institution’s policies of setting lower limits on student credit cards, they know that it is likely the student will overuse their new found resources and create a terrible personal debt issue.

The solution to avoiding college student credit card debt is very much the same as avoidance of any other type of debt. Really, the situation is the same, the only difference is that college students are generally less prepared to handle the burden. The first thing that must be realized in order to avoid college student credit card debt is to understand that a credit card is not like free money. This is a common mind trap that new users fall into and can lead to a much bigger burden of debt.

Likewise, in order for students to avoid debt it is important to not overspend. This is difficult because most college students don’t really know what overspending is or when the point of overspending is reached. Simple things can still be done, however, such as not purchasing things simply because they are on sale, remember that something is always on sale so you can always come back later to purchase the item, or wait for something better to come along.

Its also important for college students to form a monthly budget to avoid college student credit card debt. Writing down a set budget at the beginning of each month and then recording each transaction that occurs, as it occurs, is important so that you always know where you are in relation to your budget. Simply writing it down is not enough, of course, so its important to follow the budget that you’ve set up consistently.

Another technique to avoid debt is to avoid getting a second credit card. This can be tempting since it seems easy to just grab one and then “never use it”. Unfortunately, this never really works out and you end up building your college student credit card debt into something monstrous. Its also difficult to avoid because with college student credit card limits being so low, it seems natural to simply apply for more of them to make up the difference. This is a bad idea. One credit card should really be enough.

Its important for students to realize that the true value of having a card is to learn how to properly managed debt and in particular college student credit card debt so that once they become employed and receive multiple credit cards with large limits, they can managed them effectively without causing themselves financial stress.

Sean Carrell
http://www.articlesbase.com/non-fiction-articles/college-student-credit-card-debt-96923.html

Most Americans are well aware of the far-reaching financial consequences of bankruptcy protection. Bankruptcy can immediately and significantly lower FICO scores, darken credit reports for up to a decade and, depending upon the situation, forever prevent you from some sorts of financing or employment. In a sense bankruptcy means simply  that you lose the game. Even as a form of speech – being morally or spiritually ‘bankrupt’ – the notion’s hardly complimentary.

Nevertheless, as spiraling bills force more and more borrowers to sadly ponder what would’ve been once unthinkable, many consumers are forced to consider bankruptcy as a final alternative to seemingly insurmountable debt-loads. And, because bankruptcy’s so well-known as a final resort, a good number don’t bother to investigate the actual truths of bankruptcy (particularly after the restriction-tightening recent legislation) before succumbing to the inevitable.

More than ever before, this is a shame. Bankruptcies are no longer a guarantee of debt liquidation, the negative impacts can well beyond credit score repercussions, and, especially now, other bankruptcy alternatives may serve the average consumer better as they seek debt relief. Even on a Chapter 7 bankruptcy – and even though Chapter 7 notation would appear on your credit report for seven to ten years following – it’s possible that not all debt would be eliminated. In other words, the unlucky filer could yet adopt all the corrosive drawbacks of bankruptcy without the expected benefits. Considering this, it’s more important than ever for all borrowers even beginning to think about bankruptcy to closely analyze all aspects of the new legislation.

First of all, it’s no longer wholly the consumer’s decision on which sort of bankruptcy to file. As most past debtors attempted the Chapter 7 (which did, whatever the negative effects upon credit, liquidate most outstanding bills), this should be the most striking difference for average borrowers. Under current legislation, the courts must subject your income from six-to-nine-months ago to what’s become known as ‘the means test’. This test compares past income (no grace given if, say, the borrower has since changed jobs) with the average income from the state and then subtracts arbitrarily decided living expenses. Even avoiding the obvious regional and career differences (with housing prices in Fresno rather less expensive than those in Southern California, say, or the vehicle needs of a contractor more expansive than secretary), this allows a court trustee or their assistant to, upon their whim, change every bit of your life. Families have been forced to move or pull children out of private schools with little warning. Allowing the government free rein to budget and plan your family’s future carries obvious risks.

In previous years, of course, whomever went bankrupt would have to face the threat of their property and possessions being taken by the court and sold off to pay the creditors – every once in a while the news would cover an auction of celebrity memorabilia essentially being run by the IRS, for example – but ordinary debtors rarely had to worry about the loss of household items since their collected value, after depreciation, simply wasn’t worth enough for the government to bother with. Now, however, the tax laws insist all possessions (hobby equipment, children’s toys, family heirlooms) be listed according to their replacement cost: sentimental value, as you’d expect, not to be considered.

More worrisome, any significant investments (aside from custodial trusts or tax-deferred retirement plans like Individual Retirement Accounts) could be liquidated. Second homes and second vehicles are also fair game. Depending upon your specific state’s exemptions, even your residence or primary vehicle could also be forced towards auction. Essentially, the exemptions protect some degree of equity for the home, but, if the borrower had paid down too much of the mortgage balance, the courts could insist the home be sold with all excess equity given over to creditors. It’s imperative that every homeowner even considering bankruptcy search out his or her state’s specific protections and talk to a bankruptcy attorney about the potential fall-out.

There’s another even more significant reason to ensure you’ve a well-trained attorney with whom you feel comfortable. It’s considerably easier under the 2005 act for both creditors to sue for fraudulent bankruptcy filings and for the government to initiate criminal proceedings. Obviously, there should be safeguards in place to prevent the genuinely mercenary from taking advantage of bankruptcy protection, but gray areas within the law can also unnecessarily vilify even those honest borrowers that underestimated a motorcycle’s worth or forgot about accounts they hadn’t touched for a decade.

Again, obviously, for many consumers – those without investments or significant equity in their homes or vehicles; those willing to forego all accumulated possessions; those that wouldn’t mind the government planning their family’s budget for half a decade; those that can’t imagine needing credit reports or FICO scores again – personal bankruptcies can still be of some use. Even for those desperate souls, though, we still urge the consultation, whatever the cost, with top bankruptcy attorneys. For all others, it almost always makes sense these days to do whatever possible to avoid bankruptcy altogether – especially as other alternatives, such as debt settlement, have become increasingly popular. It was always meant as the final option, but, after the recent legislation, that can be all too true.

John Chase
http://www.articlesbase.com/debt-consolidation-articles/top-reasons-to-avoid-bankruptcy-721628.html

Reducing your credit card debt is not easy, and requires planning and discipline. We all know that it is much easier to pull out that plastic than to pay cash for something. Credit card balances therefore escalate quickly since it doesn’t even feel like we are spending. The high interest rates on credit cards just make the balances go up even faster.

The answer to reducing credit card debt is to reduce credit card spending. But this is easier said than done. If you have the credit card in your pocket, you will be tempted to use it. The best solution is simply to destroy all of your credit cards except one. You save that one for use in case of emergencies. Cut up all the credit cards except the one with the lowest interest rate.

Another solution would be to take advantage of a zero percent credit card offer to do a balance transfer of all of your credit card debt. These offers come in the mail from time to time, so watch for them. The advantage of this is that 100% of your payments are reducing your debt, not paying interest. The zero percent will only apply during the introductory period, and what the credit card company making the offer is hoping for is that you will still have a balance at the end of that period that they will earn their interest on.

But for you, the credit card holder, the best way to manage this is to dovetail one zero balance offer onto another. Have the application filled out on a new one so that as the old one finishes its introductory period, you are ready to transfer that balance onto the new one, and on and on until the entire balance is paid off. If this is not possible, try to pay as much as you can during the introductory period so you end up with a smaller balance instead of a larger one due to interest accumulation.

If you do not receive a zero percent interest rate offer, look around for the cheapest offer you can. As long as it is lower than the interest rates you are currently paying, you will save money and be able to pay off your debt faster. Your goal should be to reduce your interest rate so that part of your monthly payment is paying off balances instead of just interest. Otherwise, you will never get rid of credit card debt.

Another excellent idea is to have your bank make automatic payments to your credit card bill. Your payment will always be on time, avoiding late charges, and you will start to reduce the credit card debt.

You can also consider a debt consolidation loan. The main advantages of a debt consolidation loan is that it is at a lower interest rate than your credit card debt, and that you only have to pay one lump sum instead of several smaller payments that add up to a larger total sum. This makes keeping track of your bills easier, and it will get all those collection agencies off your back.

Clinton J. Maxwell
http://www.articlesbase.com/finance-articles/stop-all-that-credit-card-spending-and-start-using-debt-management-97658.html