To Get Rid Of Credit Card Debt – Is Chapter 7 Bankruptcy Your Best Option?
Reading the whole article will give you more insight.
Banks and credit card companies through lobbyist pushed eight years to get a bankruptcy reform bill passed in congress but who has it benefitted?
They finally got their wish and a new bankruptcy reform bill was passed. The reason behind needing the bill according to its backers was because Chapter 7 bankruptcy had gotten out of hand and people were simply running up all kinds of credit card debt and using Chapter 7 as a means to be forgiven of the credit card debt without any recourse.
Those against the bill sited that the low middle class working people like minorities, single mothers, and the elderly would suffer if the bill was passed because they no longer would have a debt relief outlet if they failed on hard times due to things like job loss and rising medical costs.
Chapter 7 allows a debtors credit card debt and other debts to be completely wiped out under certain situations. But there is a means test that determines whether or not a debtor can qualify to have his or her credit card debt and other debts discharged through a Chapter 7 bankruptcy.
Basically if a debtor has approximately one hundred dollars of excess cash left over after paying their monthly obligations they must forgo Chapter 7 and instead file for Chapter 13 bankruptcy which does not allow for a total discharge of credit card debts and other debts but requires that the debtor enter into a five year repayment plan.
Also a debtor seeking Chapter 7 bankruptcy must receive credit counseling through a qualified counseling service that basically represents the banks and lending institutions and get certification that they qualify due to their financial situation.
Is it right or fair to have the credit counseling qualify the debtor when in fact they are paid by the banks? How inconvenient to the millions of low income working class people that may or do need to terminate their credit card debts and other debts due to unforeseeable financial crisises.
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Reader Comments
With unemployment skyrocketing, and the credit crisis causing a hike in credit card rates nearly across the table, more and more people are having problems repaying all sorts of debts, from credit cards to mortgages. Those pesky credit cards, with their variable interest rates, seem to trap many, many people into a downward spiral of debts. However, if a person seems to be drowning in debt, the good news is that there are still options in how to reduce credit card debt.