Over time, credit card debt can take a serious toll on your finances and the quality of your daily life. Creditors may start calling to harass you at all hours of the day and night. They may file collection actions against you. If your finances are depleted from dealing with creditors, you may start to have trouble paying your rent or mortgage on time.

If you are under increasing financial pressure due to high credit card debt and/or housing payments you cannot afford, either Chapter 7 or Chapter 13 bankruptcy may be a good solution. An experienced Marina del Rey bankruptcy attorney can help you with the process of considering or filing for bankruptcy.

Wiping Out Credit Card Debt Through Bankruptcy

There are three types of debt classifications: unsecured debt, priority unsecured debt, and secured debt. Most credit cards are not secured, meaning you didn’t have to pledge property in order to obtain a loan. In other words, with most credit cards there is no physical item of property like a house or car that the creditor can repossess if you fail to pay off the debt. However, credit card companies can chase you down in a collection action in court.

While bankruptcy is not for every situation in which debt has gotten out of hand, bankruptcy is especially effective when dealing with credit card debt. Paying a lawyer to handle collection actions can be prohibitively expensive and sometimes the result is that your wages are garnished to pay off the debt. A better solution may be to contact a bankruptcy attorney, particularly if you have several increasing bills such as debt on multiple credit cards, hospital bills, and payments left on a vehicle such as a car, boat, or motorcycle.

The purpose of Chapter 7 bankruptcy is to discharge your debts and leave you with enough basic necessities that you can get a fresh start. However, you need to pass a means test, or have a sufficiently low income, to file for Chapter 7 bankruptcy. Individuals or families who live in Marina del Rey and earn a significant monthly income may qualify for Chapter 7 bankruptcy if they have many necessary expenses.

If your household income is greater than the state median income, you must determine whether your available disposable income allows you to pay off a portion of your credit card and other unsecured debts. Those whose disposable income is over a certain amount may not file Chapter 7 bankruptcy, but may be eligible for Chapter 13 bankruptcy.

Chapter 13 bankruptcy reorganizes your debts and requires you to pay off some of them over a period of 3-5 years. Different rules apply to different classifications of debt in Chapter 13 bankruptcy. For example, you must pay back priority unsecured debts like back child support, spousal support, and income tax debt in full with interest. However, unless your credit card is secured, it will fall into the unsecured debt category and your credit cards debts will be wiped out at the end of the Chapter 13 process.

It can be embarrassing and stressful to be heavily in debt, particularly if your friends and neighbors appear to be enjoying expensive lifestyles. Bankruptcy can improve the quality of your daily life and give you a clean slate. Contact the Marina del Rey bankruptcy lawyer Devin Sawdayi at 310-475-9399 or via our online form for help.