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Many people think of credit cards as a means for luxury items or consumer overspending. However, credit cards are often a lifeline for those who find themselves in a financial emergency. In some cases, credit cards may be used to pay rent, medical bills, and emergency debts.
With the high-interest rates associated with credit card spending, it’s really easy for those rates to add up and grow into an overwhelming amount of debt. When it comes to credit cards, the longer the balance remains, the more expensive the debt. This creates an endless and expensive cycle where it feels like you’re always trying to claw your way out. Fortunately, there is hope, and an Adams County bankruptcy attorney can help you wipe out your credit card debt.
There are options when you are overwhelmed with credit card debt. First, you can try to work with the creditors to pay a low rate or obtain a payment plan. This is a great solution when opportunity allows. Unfortunately, credit card companies are not always willing to work with card owners without legal representation. If a payment plan or rate change is not an option for you, you may then decide to speak to your Adam County bankruptcy attorney to determine if bankruptcy is the best next step.
There are two primary types of debt that people in Colorado experience. The first is a secured debt or a debt that has collateral backing. The most common forms of secured debts are mortgages and auto loans. The second type of debt is unsecured debt, which has no collateral backing and is issued based solely on creditworthiness using your credit score and past history. In general, most credit card debt is unsecured debt. Both Chapter 7 and Chapter 13 bankruptcy can help wipe out unsecured debts.
Unfortunately, bankruptcy cannot discharge just your credit card debt. Instead, under US bankruptcy law Title 11, Colorado bankruptcy courts have to look at your entire financial profile. This includes looking at all debts like mortgages, car loans, and medical debts, along with your assets and income. Furthermore, to file for Chapter 7 bankruptcy you will have to take the Colorado Means Test to ensure you qualify based on the limits governed by Title 11.
Before deciding what type of bankruptcy to declare, it pays to speak to a Thornton attorney that specializes in bankruptcy laws. They will review your financial circumstances and recommend what the best course of action would be. Your Thorton bankruptcy attorney will likely recommend you file for either Chapter 13 or Chapter 7 bankruptcy, as both types are available to individuals with credit card debt in Colorado. Chapter 7 has specific qualification requirements, which can be outlined to you by your Adams County bankruptcy attorney.
Chapter 13 bankruptcy is also known as “reorganization bankruptcy. In the state of Colorado, it is a deal with your creditors overseen by the court system. This deal involves making regular payments under court supervision to your creditors, and after the payment period ends the debt will be eliminated.
Chapter 13 does include unsecured credit card debt that is not backed by any commodity. Credit card debts are often considered the lowest priority of debts, and those filing for Chapter 13 may not have to pay the full amount attached to their credit cards. Some credit card debts are considered secured versus unsecured, and your Thornton bankruptcy lawyer can help you to determine which type of debt you may be dealing with.
Chapter 7 bankruptcy is also known as “liquidation bankruptcy”. With Chapter 7, assets will be liquidated in order to cover your debts, and whatever debt is left after the sale of your assets is then cleared. To file for Chapter 7 bankruptcy, you first need to qualify with the state of Colorado. Your Adams County bankruptcy attorney will investigate your specific case, and determine whether or not you meet local Chapter 7 qualifications. Chapter 7 bankruptcy stays on your credit history for ten years, while Chapter 13 bankruptcy remains for seven years.
Filing for bankruptcy is a serious financial step. When it comes to lending, most creditors either secure loans with collateral or look at your creditworthiness based on your financial history. When you declare bankruptcy, you become high risk to lenders. High risk individuals may find that it’s more challenging to obtain a credit card or loan, and their interest rates are higher in order to offset any risk lenders believe they’re taking on.
Bankruptcy is a legal system designed to help people manage their debts without losing everything, and the government takes bankruptcy fraud very seriously. In many cases, they will not allow for luxury purchases to be included in a bankruptcy dismissal. Bankruptcy is the last option for overcoming financial hardship. A Thornton bankruptcy attorney can guide you through the process of handling your credit card debt using a bankruptcy filing.
If you are considering bankruptcy, speak with a Thornton bankruptcy lawyer first. They will review the specifics of your credit card debt and advise you on what legal options may be available to you. If you decide that bankruptcy is the right course of action, they will guide you through the petition process and help you understand your rights. Your Thornton bankruptcy attorney will be your biggest advocate and help you to get the relief you need.