Credit Card Bankruptcy

Credit card bankruptcy is just one more way that an individual can get himself into deep financial trouble and eventually sink into the black hole of bankruptcy. Much news can be heard from television and newspapers about businesses that have been run into the ground by greedy corporate executives, but who would ever think that the little plastic charge card with all the pretty colors and distinctive pictures could be the lead weight around so many consumers' feet? Trips to that frou-frou coffee place each morning, movie tickets, gasoline, some groceries here and there, those to die for shoes and purse, those new racing wheels and tires, the first plasma TV on the block, medical co-pays, fishing licenses and all the little things that go into the American consumer's day and week slowly bring the consumer to the brink. Simply swipe the plastic or show the plastic and before one blinks, ten thousand dollars can be on a charge card and the holder sits and wonders where did it all go? The scenario of credit card bankruptcy is repeated over and over again.

Recent estimates by some financial gurus say that seven out of ten Americans live pay check to paycheck. This would mean that seventy percent of Americans do not have any tangible savings and are probably living with a great deal of debt. While much of that debt could be attributed to car payments, educational loans, mortgages and other big ticket items, many other of life's luxuries have to be supported by using charge cards. It's not rocket science to figure out that making minimum payments on charge cards means at least thirty years of enslavement to those banks. So instead of debt going away, the debt, like heavy snow keeps falling and there soon becomes no where to put the stuff. And because of very tough new bankruptcy laws in the past few years, credit card bankruptcy cannot just be swept under the table as it might have been previously.

There are two types of credit card bankruptcy, chapter seven and chapter thirteen. Chapter seven is the complete forgiveness of all debts except for taxes and federal student loans. This legal action is taken when the debtor feels that there is absolutely no way out of his situation. In this particular legal proceeding, the moment that a person files for chapter seven relief, all attempts at collection are to end. The court appoints a trustee to oversee the debtor's estate and only a relatively few items are really exempt from being sold to appease creditors. The person filing for chapter seven credit card bankruptcy is allowed under law to state which items are to be exempt, but all items being claimed must be on the state's approved list. The debtor's state of residence has already declared those items that are under bankruptcy exemption.

The second type of credit card bankruptcy or any consumer bankruptcy for that matter is chapter thirteen. This is a legal motion to have the bill collectors stop calling, but it also represents a desire on behalf of the cardholder to payback all monies owed, but only over an extended period of time. In many cases, those consumers who are close to declaring bankruptcy because of high charge card debt first seek help from debt counseling companies. These companies negotiate with credit card companies to have interest rates lowered dramatically so that the card holders can begin to pare down the high amount of debt they owe. The debt counseling company does receive a fee from this negotiation process which is often included in the monthly payment made to the company for loan payback. Credit experts warn consumers, however, that even pursuing and using the help of a debt counseling company will be an adverse mark on a person's FICO report and will affect their score. Debt counseling, which can be cheaper than hiring an attorney for chapter thirteen legal proceedings may be the right alternative for many people mired deeply in charge card debt.

As stated earlier, credit card bankruptcy remains on a person's FICO report for ten long years. A chapter seven filing costs a person much of his assets, although very personal property is safe from liquidation. In some states, only a few thousand dollars of home equity is safe from the court system while in other states a person's house is totally exempt. Chapter thirteen legal actions save a person's assets and may be the best way to face large charge card debt. In either case, new bankruptcy laws passed by Congress make it more difficult for certain people to even consider the action. The first toughened portion of the bankruptcy says that a person filing chapter seven must have a household income the same or lower than the median income for that particular state. The second portion of the toughened law says that if a person or household's income is above the median income of the state, chapter thirteen is the only option.

The cost of an attorney for a credit card bankruptcy chapter seven filing is estimated at about fifteen hundred dollars. The cost for barrister fees in a chapter thirteen filing is about twenty-five hundred dollars because there is more paperwork for the lawyer to go through. The emotional cost for almost anyone going through legal proceedings such as these can be quite devastating, particularly in the long run. Yet Jesus reminds us all that the cost of ignoring our soul's salvation can be eternal. "For what shall it profit a man if he shall gain the whole world and lose his own soul or what shall a man give in exchange for his soul?" (Mark 8:36-37)

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