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Avoiding Chapter 7 through responsible credit use

Most Americans carry a balance on their credit cards, which can be counterproductive if the aim is to reduce the overall amount of debt they are responsible for. Here in Kentucky, credit card spending is very common, and it has caused serious problems for some families who are unable to handle the level of debt they have accrued. Before seeking out a solution like Chapter 7 bankruptcy, it might be helpful to consider other potential remedies as well. 

It may seem rudimentary, but if it is at all possible, paying down a credit card's balance in full every month is a good way to ensure debt never gets to the point where it is unmanageable. Every balance left unpaid accrues interest, and with many credit cards charging nearly 20 percent in interest, this can add up quickly. This is particularly true in cases where a credit card has been maxed out, which can adversely influence credit ratings. 

Late payments are also problematic. If only the minimum payment can be covered in a given month, paying it late can drop a credit score by as much as 110 points. A late payment can remain on a credit score for up to seven years. 

Of course, for some Kentucky families, challenging debt has already been accrued and it may be too late for these introductory steps to make a difference. In this case, a solution like Chapter 7 bankruptcy may be more appropriate for the situation. Chapter 7 liquidates assets to pay down creditors, and in some cases a bankruptcy court can choose to forgive certain types of unsecured debt as well. The help of an experienced bankruptcy attorney can help make this process easier to understand and implement in many financial situations. 

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Law Office of Ginger C. Cord, PSC
155 E. Main Street
Suite 330
Lexington, KY 40507

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