When Congress' recent revisions to federal laws governing credit card usage went into effect, some consumers saw interest rates double or even triple. The law now allows for credit providers to be more flexible with interest rate raises, provided they give the cardholders notice of the action and share information about the total amount of the debt and approximately how long it will take to pay it off.
The changes in the law were initially introduced as a way to protect consumers, but, in practice they are much more biased toward lenders. Following the enacting of those laws, more consumers burdened by credit card debt need help to get themselves back on the right track financially.
Although some people believe that debt management services like debt consolidation or by negotiation with creditors for more manageable payments will resolve their problems, as a bankruptcy attorney I believe that bankruptcy maybe the best option for many people with mounting credit card debt. It's important to remind people in debt that debt settlement agencies are not regulated by the government and cannot guarantee favorable results.
In addition, discharging your liabilities in a bankruptcy proceeding will not result in a taxable event. From my experience, debt settlements are often a piece meal approach that are often ineffective in resolving all debt problems. Bankruptcy on the other hand is a governed by federal law that grants debt relief. For many with uncontrolable credit card, bankruptcy is the best option.
How Does Bankruptcy Affect Credit Card Debt?
Different types of bankruptcy filings affect debt in different ways. Generally, credit card debt is unsecured, based only upon an obligation to pay. Secured debts, on the other hand, are based upon actual collateral, for example, a financed automobile or a mortgage on your home.
Chapter 7 bankruptcy involves the liquidation of non-exempt assets to pay off debt. Unless the bankruptcy court finds that a debtor has acted in bad faith while accruing credit card debt, it is usually dischargeable.
If you are concerned about the amount of debt you have, I offer a free 30 minute telephone bankruptcy consultation where you can learn more about your legal rights and options and find out if declaring bankruptcy may be the best option for you.