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Is bankruptcy is the only option to discharge credit card debt?
January 15th, 2010 | 
Author: I often hear from people who come to me for debt relief asking shall I file bankruptcy to discharge the credit card debt. But many people fail to recognize filing bankruptcy is not that easy as said. There are many questions to be answered before deciding.
When should some one declare bankruptcy? I say people must declare bankruptcy only as a last option because filing bankruptcy will ruin all your finance future as it will be listed on the credit report for at least 10 years. There are many options that one must try before which has less impact compared to bankruptcy.
Debt settlement is an alternative when you are thinking about bankruptcy because negotiation initiative with skilled and experienced professional can benefit you by reducing al most 70 percent of balances you owe where the remaining debt can be paid off with ease. Doing this will have very less impact on your finance future compared to filing bankruptcy.
Am I eligible to file bankruptcy and what type? In order to be able to discharge the debt by filing bankruptcy, the debt incurred need to be unsecured such as credit card debt, medical bills, personal loans etc. To file bankruptcy in court and trying to declare chapter 7 bankruptcy, the attorney dealing with you case asses your average income over last 6 months and measure against the median income of the state in which the consumer resides. If your income lies above the median income of the state, you are required to answer a series of questions in order to determine your eligibility to file chapter 7 bankruptcy and if you are dealing with credit card debt, personal loans or any other kind of consumer debt and earns over the average median state income after all deductions then you may be forced to file chapter 13 bankruptcy. If your average income lies below the state median income then you will be asked a series of questions to determine your eligibility for chapter 7 bankruptcy.
New legislations introduced by federal government have made it more difficult to obtain full bankruptcy where all debt can be eliminated with no effect other than negatively affecting credit report. There some kinds of debt like federally managed or issued student loans that are not considered by bankruptcy laws and can not be discharged with chapter 7 and under chapter 13 repayment plan which is making more difficult for bankruptcy attorney to assist their clients in discharging their debt.
If it the situation what is the benefit of filing bankruptcy when you are unable to discharge total debt. At the same time you must compare the cost of filing the bankruptcy in court of law and attorney dealing with your case and what if you do not get relief after spending all the dollars – let them go in vein in this tough time?
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Hi Mr.Debt Planner,
One thing that is not quite clear to me is debt settlement. Who are the parties in debt settlement? My bank calls me to offer debt settlement but I have to pay first all outstanding balance. This is the reason why I can pay my bills at all. They want to attach my home for that matter but my loan was that which is not secured, I mean I made no collateral to make the loan it was a salary loan. I understand this is not a forum but I hope you can answer my questions. Thank you!