When to Eliminate Credit Card Debt

Mounting high interest rate credit card debt is overwhelming and debilitating.  If you are only making your minimum payments and you are spending most or all of your disposable income leaving you with little money to pay for necessities of life, bankruptcy may be a good option for you. If you have already stopped making your payments, then you are likely receiving constant harassing telephone calls from debt collectors.  In a short time, if it has not happened already, your creditors or their debt collection legal departments will file a credit card lawsuit against you.  Holding off on making your payments to try to settle your debts can make matters much worse because the balances on cards with high interest rates can double every 3 years: $25,000 becomes $50,000, $50,000 becomes $100,000, and so on.  At some point, you will need to file a Chapter 7 to wipe the slate clean and begin reestablishing your credit.  If this describes your situation, then you will benefit by filing a bankruptcy now and stating to rebuild your credit sooner rather than later.

Filing a Credit Card Bankruptcy in San Diego

Determining whether a credit card bankruptcy (a Chapter 7 case filed primarily to eliminate credit card debt) is the right solution for you, involves a 2-step approach.  First, you need to determine whether you qualify to file, so that you’ll know if Chapter 7 is even an option that is available to you.  This means taking and passing the Means Test, although there are other legal requirements in order to qualify for bankruptcy under Chapter 7.  Second, if you can pass the Means Test, and you otherwise qualify (as determined by your lawyer), then you need to ask yourself a very important question: Do I need a fresh start?  If the answer to that question is yes, and you qualify to file, then a credit card bankruptcy may be a good option to help eliminate your credit card debt.  An experienced San Diego bankruptcy attorney can help you file successfully, wipe the slate clean, and become debt-free.

Become Debt Free

For those who qualify, Chapter 7 is a very effective tool for helping you become debt free and get a fresh start.  If your filing is executed flawlessly, you can be in and out of bankruptcy in 90 days, and wipe out all of your high interest cards and collections accounts.  This is very fast when compared to a debt repayment plan, such as Chapter 13, which takes 3-5 years to complete.  With Chapter 7, you can become debt free fast, usually in just 90 days.

Debt Repayment Plan

If your income is too high to pass the Means Test, then you will have to file a debt repayment plan and repay a percentage of your credit card debt through a court approved repayment plan.  How much you would have to repay depends on how much disposable income you have under the Means Test.  The percentage can be as low as 1% or as high as 100%, or anywhere in between.  Determining this amount requires a complex and detailed set of calculations that can only be done properly by an experienced attorney.  The calculations and analysis are not based on how much you owe on a particular card or on all of your cards.  Rather, the calculations to determine the percentage of your total card balances that you will have to repay are based on your income and expenses.


Contact Bankruptcy Legal Center today to set up a free consultation with a lawyer and go over your options for how to eliminate credit card debt and see if a Chapter 7 credit card bankruptcy filing would be a good option for your situation.