If you have credit card debt and are making only the minimum monthly payments, it is very likely that it will take you several years to pay off those balances depending on the amount of the balances and interest rates on those credit cards. Often, you may see a story on local or national news networks about an individual or families consolidating and repaying back their credit card debt. However, more often than not, people who have tried to consolidate their credit card debt have been scammed or only some of the credit card companies agreed to a lower repayment leaving them back at square one with their other credit cards. If you find yourself in the same predicament of only making the minimum monthly payment on your credit cards, Bankruptcy may be your best option.
A Chapter 7 Bankruptcy will discharge your credit card debt, meaning that you will no longer be liable to repay back that debt. Whether or not you will qualify for a Chapter 7 will depend on your total household income compared to the median income of a similar household in your geographical area. This is known as the "means test". If you fall below the median income level, you will qualify for a Chapter 7 (assuming that you have no unprotected assets such as a home with equity beyond the State exemption amount). If your income is above the median income level, there is a presumption that you will not qualify for Chapter 7, but that presumption may be overcome under certain circumstances.
However, assuming that presumption cannot be overcome and you cannot qualify for Chapter 7, you can file a Chapter 13 Bankruptcy and repay back a portion of or all of your debt over a period of 5 years. You're probably asking - "If I have to repay back my debt thru a Chapter 13, what's the point of even filing for Bankruptcy?" The answer is three-fold: (1) A Chapter 13 is a Court approved repayment plan, meaning your credit card companies have very little say in the terms of the repayment plan; (2) You will be debt free in a maximum of 5 years as opposed to never being debt free; and (3) You can realize a substantial savings in a Chapter 13 because the repayment plan typically provides no interest on the credit card debt and the repayment plan may only require that you repay back pennies on the dollar, so once you complete the Chapter 13 plan payments, the balance of your credit card debt are discharged.
If you find yourself in the same predicament of only making the minimum monthly payment on your credit cards, contact Gilbert R. Dizon - Attorney at Law at (630) 465-0713 to schedule a free consultation. Or, if you have a friend, relative or co-worker in this situation, please pass our information to them. Gilbert R. Dizon - Attorney at Law has represented individuals in the Chicagoland area in Chapter 7 and Chapter 13 Bankruptcy cases for over 17 years. And, unlike most bankruptcy law firms - we do not concentrate on volume - we concentrate on you.