Chapter 7 Bankruptcy: Should You Dump Your Credit Card Debt?
In the past a consumer with a good payment record and solid financial history would be just the person large financial institutions love to work with. If you paid more than the minimum on revolving charge accounts, paid on time and had a good rating with the credit bureaus, card issuers competed for your business.
Reducing credit limits for consumers is the first of a one-two punch being broadly applied by large credit card issuers. The reduced credit limit is quickly followed by a huge increase in the interest rate of the credit account. The bank who reduced the credit line thereby placing that consumer in a higher risk category (through no fault of the consumer's) now demands higher interest payments.
In the space of 60 days, a consumer with $25k in credit available and a $10 balance may see his interest rate go from 11-12% to over 30% on all the revolving credit accounts he carries. This can double or even triple the minimum payments due each month on those accounts. That's another problem as making only the minimum payment due on revolving accounts can lower your credit rating even more.
If you cannot pay the larger payments being demanded and you do not have the ability to pay off at least some of the accounts quickly with your income or savings, you might consider defaulting on your credit card balances by filing for Chapter 7 bankruptcy.
It is preferable to default on credit card debt than to damage your family's financial well-being. Personal bankruptcy filings have risen in recent months and predatory credit card companies are one of the biggest reasons for the increased numbers.
Though bankruptcy may stay on your credit report for ten years, it does not mean you cannot regain your ability to obtain credit.
It takes some effort to re-establish yourself financially but there is life after bankruptcy and for many faced with soaring credit card assessments, it's the only logical option open to them.
Author: Trace Morgan
About the author:
http://SolvingCreditProblems.com - latest info on surviving the economic downturn, bankruptcy, budgeting, and foreclosure. Use our calculator at Solving Credit Problems to learn if YOU qualify for the government mortgage modification program.
Article source: Free Bankruptcy Articles.
More free articles under
Bankruptcy
10 Reasons Why Obama Cannot Save The US
If you have been not been living under a rock for the past 2 years you now realise how bad the credit crisis is. People losing houses, people refused credit, the stockmarket collapsing, pension funds ...
Debt Consolidation: An Alternative to Bankruptcy is Debt Consolidation
What is Bankruptcy?
Bankruptcy is when a person or business officially declares the inability to pay back creditors the money that was previously borrowed.
This (Bankruptcy) should only be done...
Business Phoenixing - Is a Pre Pack a practical way to avoid company failure?
As the recession continues to bite, more and more businesses are finding it difficult to continue trading. However, very often these difficulties are not because customers have stopped buying complete...
Bankruptcy for Business: Will I Lose My Incorporated Business?
If you are considering filing for bankruptcy, but you own an incorporated business, you're probably wondering if your personal bankruptcy will mean small business bankruptcy as well. Especially if the...
IVAs - Better way to move out of bankruptcy
Bankruptcy is a condition that nobody likes to be in but sometimes one cannot control the various conditions like fuel price hikes, inflation etc. that lead to the bankruptcy. Then one can either go f...
Bankruptcy --- How to go about handling bankruptcy
Bankruptcy is a condition that everybody wants to avoid. But sometimes due to poor financial management and sometimes due to the external factors which can not be controlled by the person people find ...
Is Bankruptcy right for you?
It could be that bankruptcy is the most suitable debt solution for you if your debt has become unmanageable and you can't keep up your monthly repayments.. You may of been told that bankruptcy should ...