Credit Card Bankruptcy

Bankruptcy and Credit: How Bankruptcy and Your Credit Are Connected

Credit is something that just about all of us has, for better or for worse. Sometimes you can think you have satisfactory credit when it seemingly goes bad overnight. Regardless, most kinds of bad credit are fixable without the aid of filing bankruptcy. Bankruptcy should only be used as a last resort to insurmountable debt because of its consequences and how it will remain on your credit report for as many as 10 years.

How to Fix Poor Credit

•    Obtain a copy of your credit report from a licensed credit bureau to ensure there are no inaccuracies

•    Pay off any outstanding debts that you can afford, at least make payments on them starting with those that have the highest interest rates

•    Contact a licensed credit counselor about the viability of a debt consolidation or debt management program

•    Cut down unnecessary spending and spend all your income on life’s necessities and bill payments

•    After your credit cards have been paid off then open a new credit card under a secured credit line but be absolutely sure to pay the balance on time every month

As you can clearly see, fixing credit involves not only cutting off the unnecessary spending and reorganizing a repayment plan, but also rebuilding credit once you’ve dug yourself out of the hole.

If the aforementioned tactics do not work given the amount of debt you’re suffering from then bankruptcy might be your only option left. Talk to a licensed bankruptcy attorney in your area about your debts and whether Chapter 7 bankruptcy or Chapter 13 bankruptcy is a likely scenario. That way you can start the process of breaking down your debt, fixing it, and then rebuilding it back to a level of respectability.

Chapter 7 vs Chapter 13 Bankruptcy

Bankruptcy laws give individuals seeking debt relief two main bankruptcy chapters: Chapter 7 debt elimination and Chapter 13 reorganization.

In Chapter 7 bankruptcy, debts like credit cards, medical bills and utility bills can be completely wiped out. Some property may be used by the bankruptcy courts to repay creditors--however, bankruptcy laws in each state allow individuals to keep much of their most valuable assets.

In Chapter 13 bankruptcy, individuals past-due on mortgage payments or auto loans work out a repayment plan in bankruptcy court. Filers who also have credit card debt or medical debt may be able to reduce or eliminate those bills.

A local bankruptcy attorney can help you decide which bankruptcy option may best suit your needs.