Credit Card Bankruptcy
Credit Card Bankruptcy is just another form of general Bankruptcy. Many people are forced in to bankruptcy by credit card companies. Credit cards have been relatively easy to get a juggling debt with them has also been easy. Credit Card Bankruptcy occurs when you can no longer pay the minimum amount due on your credit cards on a monthly basis. Credit Card penalties start being charged and these quickly compound the credit card debt and without swift intervention and honesty with the credit card companies forced bankruptcy through credit card bankruptcy is inevitable.
So what can you do to avoid credit card bankruptcy, firstly try not to run up debts on credit cards, generally credit cards have the highest interest rates compared to other methods of borrowing such as bank loans. If you have credit cards debts do not ignore them, this is the worse thing you can. Every credit card company would prefer a frank dialogue rather than ignored calls, letters and emails.
If you credit score is still good do you home work and find the best interest free balance transfer deal for your outstanding credit card debts. You can often find up to 18 months interest free credit on balance transfers from major credit card companies. These will have a small 1-4% balance transfer fee, which when compared to the 18% – 35% fee you maybe paying will vastly decrease you monthly payments and stop the debt increasing for the interest free period.
If you do transfer debts it is important that you shut down as many of the previously held cards as possible once you have transferred the debt, as these will still appear as open credit lines on your credit record and could effect your ability to get new credit in the future.
If you can not pay off all you debts with a new interest free credit card start by paying off the debts which are attracting the biggest interest rate, this way you will save the maximum amount of new interest.
If you cannot secure a interest free credit card deal you maybe able to secure a very low rate interest deal on new credit transfer for a balance transfer. If this is the case then the above mentioned steps apply.
It is worth comparing the details of low rate credit cards with bank and other loans available, but think carefully before taking out a loan that is secured on your property. Generally credit card have no security behind them and this makes it much harder to force the sale of your home to pay off credit card debts, but if you switch your debt to a secured loan and fail to make the required payments then you may loose your home.
If you have no way of borrowing at a low or free rate, you could consider remortgaging your property if you have some equity in it. This will usually provide a very cheap way of raising funds but as with the warning above you are bewitching unsecured debt for secured debt.
If you have more than one creditor it maybe possible to negotiate a debt repayment plan with your creditors, where by you pay what you can realistically afford over a longer period of time. Many credit card companies would prefer this approach than trying to foreclose on the debt and forcing credit card banjruptcy.
It is some times helpful to seek independent help to negotiate this kind of solutions, but beware there are many commercial companies out there who make a fortune from negotiating these kind of deals to avoid enforced credit card bankruptcy.
In the UK the Citizens Advice Bureau is a great first point of contact for impartial debt advice and in the USA look for a debt agency that has been awarded not for profit status by the IRS as these tend to be the cheaper companies to help ensure you avoid credit card bankruptcy