credit card debtCredit card debt can happen quickly – and to anyone. There is a misconception that only irresponsible people misuse their credit cards, but that is not true at all. Many reasons can cause people to use their credit cards. Job loss, divorce, or a medical emergency are all instances when credit cards are used out of necessity. If you are considering bankruptcy because of credit card debt, consider these questions before you decide to file.

Can You Afford to Pay Back the Debt You Have?

If you are struggling to make the monthly payments, this may seem like a silly question. However, you may be able to pay your debt if you cut expenses in another area or add some overtime to your income. Neither of these options will be easy, but if you have a lot of income, you may not be eligible to file for a Chapter 7 bankruptcy, no matter how much you owe in credit card debt. A Chapter 13 bankruptcy is basically a repayment plan that the court will set up for you, so you will be making payments for three to five years.

At times, your credit card company might settle your debt for less than what you owe. If you ask for this, though, you need to be prepared to send the settlement immediately. You can also ask your credit card companies to lower your monthly payment or your interest rate. Debt consolidation is another option you can try before filing for bankruptcy.

If you are struggling to make your monthly payments, and cannot afford to pay back what you owe, bankruptcy may be the best option for you. Before you make that decision, talk to a financial counselor who may be able to see other options for you.

credit card debt

Are Your Credit Card Companies Harassing You With Phone Calls or Emails? Are You Being Sued For Your Debt?

If you cannot make your monthly payments on your credit cards, the company will likely begin to try and contact you about your account. These phone calls will most likely become more frequent as your account falls farther behind. Many people say the harassing phone calls are the reason they begin to think of bankruptcy and not look at other options.

Your credit card company may consider a lawsuit to get their money from you if you have a good income or owe a substantial amount. If the company goes to court, they may win a judgment that will allow them to garnish your wages. This means that money will be taken directly from your paycheck and sent to your credit card company. Contact your credit card company and see if they are willing to work with you. If not, you may want to seriously consider filing for bankruptcy.

Do You Own a Lot of Property?

If you decide to file for Chapter 7 bankruptcy, any property you own will be sold and the proceeds used to pay your debt. Owning a lot of property could mean that Chapter 7 is not your best choice. A Chapter 13 bankruptcy will allow you to keep most of your property, but you will have a repayment plan set up to ensure you pay back your credit card debt over the next three to five years. Your credit card company will not be allowed to contact you once you have filed for bankruptcy so the phone calls will have to stop.

Every situation is different and each state has its own bankruptcy laws. If you are unsure whether bankruptcy is your best choice, contact a financial advisor who can help you sort through your options. A large amount of credit card debt does not necessarily mean you need to file for bankruptcy to regain your financial freedom.