If you’ve spent too much on your charge card, you quickly come to realize how difficult it is to clear charge card debt. Millions of American’s have little alternative but to pay the minimum at the end of the month, and that’s why your debt could last for the remainder of your life. It’s called revolving debt because, unlike a secured loan, it doesn’t have a defined term. You make a payment, do a bit of shopping and you’re back to square one. However, you don’t run into money problems until you fail to pay. You’ll not only have to pay a high rate of interest on the outstanding balance, you’ll also start to accrue some high charges on your account.
The issuer will attempt to contact you, but you’ll probably just bury your head in the sand. It’s understandable when you don’t have any money to offer your creditors. Once the account is deactivated, it’ll either be dealt with by an internal agent or it’ll be passed on to a debt collection agency. Customer accounts are sold-on cheaply, and the remainder is written-off against company taxes. The agency will then contact you so they can collect the full debt. Any money that they recover that’s greater than the figure that they paid for the account represents a profit. Even if your account is being handled internally, they’d rather reach a deal with you. They may not get all of the money, but they’ll get a lot more than they would if you file for bankruptcy.
Whether chapter 7 bankruptcy is the correct debt-free plan for you depends upon many factors. If your debts are relatively small, you’re probably better-off considering an alternative to bankruptcy. However, if you owe a lot of money and most of your debts are unsecured, check to see whether chapter 7 is an option. The bankruptcy law was tightened in 2005, so you’ll need to pass a strict means test. If your income is under the median for your state and you haven’t filed during the last eight years, your application is likely to get approval. If you have non-exempt assets, such as a valuable collection, you’ll be expected to hand these over to a trustee. If you wish to protect these items, you’ll need to file for chapter 13 bankruptcy or pay off charge card debt with a consumer debt relief program.
If you owe small sums of money to lots of different creditors, it’s worth consider a debt management plan. Although you won’t be afforded the same court protection from creditors, you’re able to offer your creditors an affordable monthly sum. This means that you’ll offer your creditors a payment that you can afford, not the amount that’s specified in your credit agreement. All parties will need to agree to the offer. Once in place, you’ll get the help with credit card debt that you desperately need. All that you have to do is make a single monthly payment to an intermediary and they’ll distribute the proceeds to your creditors based on the amount that you owe them.
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