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Handling credit card debt before Chapter 7

Most American families carry a significant debt load. Here in Kentucky and elsewhere throughout the nation, individuals carrying credit card debt may be looking down the barrel of serious interest payments. Thankfully, there are a variety of ways to handle credit debt, from consolidation to Chapter 7 bankruptcy. 

Most financial advisors agree there is no one "right way" to handle unsecured debt like credit card debt. Generally speaking, the "best" direction depends heavily upon the individual's financial situation. Consolidation loans, for example, tend to work best for those who are able to afford higher payments month over month, and wish to pay down debt inside a fixed window of time. A consolidation loan means borrowing a sum to pay down multiple credit cards at once, hopefully paying back the loan at a significantly lower interest rate. 

Reducing debt ahead of Chapter 7 filing

With spring rapidly arriving across America, many families take the opportunity to clean house after a long winter and holiday season. Here in Kentucky and elsewhere around the nation, financial advisors suggest many people could stand to "spring clean" their debt load as well. Credit card debt is one of the most destabilizing forms of unsecured debt that can put an individual or family in a precarious financial position. Before choosing to file for Chapter 7 bankruptcy or an equivalent, there are other steps that can be taken to sweep away lingering debt. 

For some people, having a set goal in mind beyond simply getting rid of debt can be a helpful motivator. One couple found planning a vacation to be taken once their debt was settled helped them stick to their budget. Of course, it would be important for any family considering this tactic not to go right back into debt while vacationing, but this simply highlights the importance of careful financial planning. 

Chapter 7 just one way to end credit card debt

The end of 2018 saw U.S. credit debt at its highest levels in history, capping out at some $870 billion, according to the Federal Reserve Bank. The previous record was back in 2008 during the height of the financial crisis, but this year, the numbers swelled thanks to a glut of holiday spending both here in Kentucky and around the country. For some families, this means it's time to tighten up a budget and curb spending, but for others, this could mean crippling debt. Thankfully, there are a variety of options available to those in need, including debt restructuring and Chapter 7 bankruptcy. 

A recent survey suggested that nearly 1 in 5 Americans are dependent upon credit for day-to-day expenses. With interest rates falling between 15 and 25 percent, this can mean ballooning debt on any budget. Financial advisors suggest a good first step to handling debt of this type is to confirm how much is actually owed by writing down a full account of all balances on credit cards. From here, a debtor can ensure he or she is at least paying the minimum amount owed on accounts to avoid delinquency. 

Handling credit debt before Chapter 7

March 21 marked national Credit Card Reduction Day, which is an important date for many American families who are now carrying a record amount of consumer debt. For residents of Kentucky, the prospect of paying down credit card debt can be a daunting one, but it can be buoying to remember there are a variety of options available for consumers to work toward lowering their debt. Even for the most extreme cases, a Chapter 7 bankruptcy filing can be used to wipe the slate clean of accrued debt that can hamper a family's financial health. 

One of the most effective ways of beginning the process of paying down credit debt is by utilizing a balance transfer. This means taking the balance from one card and transferring it to a new card with a lower interest rate, or preferably one with a zero-interest introductory offer. This can allow an individual to consolidate debt onto one card and make a significant dent in the outstanding balance during the zero-interest period. 

Handling debt, including Chapter 7

Depending on the type of debt being carried by an individual, business or family, different tactics may be required to handle it. For example, a mortgage on a home here in Kentucky carries a considerably lower interest rate than debt accrued on a credit card -- hence why some financial experts refer to "good" and "bad" forms of debt. To handle "bad" debt, sometimes it is helpful to take on other forms of "good" debt; for example, a personal loan. This is the fastest-growing debt type in America, and can help families pay back high-interest debt before considering Chapter 7 bankruptcy as the next option. 

Once upon a time, a personal loan carried with it considerable stigma -- a so-called "last resort" for those carrying massive credit or other high-interest debt. More recently, however, many Americans have used personal loans to consolidate multiple high-interest credit card debt into a loan with a lower, more manageable interest rate. Unfortunately, some people can find themselves in trouble if they take out a personal loan without mitigating their use of credit cards. 

Baby boomers: When bankruptcy and retirement collide

The retirement years are typically thought of as a time to bask in the delight of grandchildren, to take off with your spouse on extended trips or simply to be free of the fetters of work to putter in the garden or reinvent oneself as a volunteer in the community.

While the economy has recently been surging, many baby boomers are still reeling from the recession of the last decade that cost many their homes and lucrative jobs. If you are a baby boomer who is approaching retirement age, you may find your golden years restricted by insolvency. But for some senior citizens, retirement means facing bankruptcy.

Consolidating debt ahead of Chapter 7

Debt is a serious problem for many American families. Here in Kentucky, the average credit card debt load can be quite heavy, but thankfully there are ways to handle it. One major option is consolidation, which allows multiple debts like credit cards to be handled all at once. This is one of several options available for handling debt, a list that includes Chapter 7 bankruptcy. 

Debt consolidation, in short, is the act of taking multiple debts and rolling them into one convenient monthly payment. In some cases, this allows people to take a high-interest debt like a credit card and move it to a repayment option with a lower interest rate. It also means forgetting about multiple payment dates per month, allowing for a single payment that is easier to keep up with and easier to afford. 

How credit card spending can lead to Chapter 7

It is no secret that credit card debt is a crippling issue for many American families. Both here in Kentucky and elsewhere around the nation, credit card debt is reaching record highs. There are several key issues that can bring people to the point of financial instability, but there are also options to help correct these issues. For individuals or families who can no longer handle their debt load, filing for Chapter 7 bankruptcy may be the most responsible solution in handling debt. 

Even for people who are financially literate and fastidious in their budgeting, unforeseen circumstances can arise requiring influxes of money. Medical debt is one of the most common causes of unexpected costs, but even something as simple as a fender bender can set one back hundreds or even thousands of dollars. The temptation exists to fall back on a credit card in situations like these, but it is more financially viable to set aside a "rainy day" fund if possible to handle such costs. 

Rebuilding credit following Chapter 7 filing

For many Americans, debt is a serious day-to-day problem with the average family carrying thousands in unsecured loans. Credit cards, medical bills and other debts can add up for a Kentucky family, and some choose to file for Chapter 7 bankruptcy in order to get back in good financial shape. Many people worry that the road to economic stability will be difficult, with credit scores taking a hit as a result of a bankruptcy filing, but thankfully there are a variety of ways to rebuild credit even after Chapter 7. 

It is no secret that inefficient budgeting often plays a role in the decision to file for bankruptcy. The first order of business for a recovering filer is to sit down and create a comprehensive budget based on current finances that does not rely exclusively on credit to make ends meet. One key element to this budget is the allocation of funds to savings, in order to be prepared for unexpected expenses that might otherwise be relegated to a high-interest credit card. 

Tips for financial responsibility during and after bankruptcy

When you file for bankruptcy, you might be accustomed to using your credit cards to pay for even the most basic bills. Now you have to learn how to live on only your income. This isn't always easy, and you have to plan ahead so you can come out on top.

Several things should come together to create your plan. You should set things up so that you can continue this type of living when your bankruptcy case is over. By then, you should be able to use credit wisely and only when absolutely necessary.

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