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Avoiding Chapter 7 through careful planning

As a general rule, using credit is an unavoidable requirement of everyday American life. This is not always a bad thing, since measured and responsible credit use is what helps build positive credit ratings toward larger life goals, but sometimes, as some Kentucky residents can attest, it can get out of hand. While options like consolidation and Chapter 7 bankruptcy exist, there are a number of credit card "don't"s that, if avoided, can help to preserve financial health. 

A major stumbling block for many consumers is the credit card minimum payment: the amount the lender requires to be paid in a given month. Unfortunately, paying only the minimum means paying only the interest on a card, which in turn means the principal balance is barely affected. This can lead to months or even years of debt, with the card holder paying thousands in interest along the way without paying down the debt itself. 

Paying late can have negative effects as well. When a credit card payment is received late, it incurs a penalty, usually around $28 for the first infraction and $39 for each consecutive late payment. This can negatively impact a credit score, and sometimes even lead to penalty interest rates. A lender can choose to increase the interest rate on a card held by an individual who has defaulted on one or more payments. 

Credit can be something of a minefield for many Kentucky residents. It is important for these residents to seek support from qualified professionals if debt is becoming unmanageable. In serious cases, a bankruptcy attorney can walk through the bankruptcy process and help to facilitate a Chapter 7 filing in order to pay down and discharge accrued debt. 

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Law Office of Ginger C. Cord, PSC
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Lexington, KY 40507

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