Despite an uptick in the national economy, many American households are still laboring under the burden of credit card debt. According to some sources, the average Kentucky debt is somewhere around $6,500 per card. This has caused concern for consumer advocates, who worry people will find themselves in a serious financial position should the economy slow. While Chapter 7 bankruptcy is always an option in cases of significant debt, there are other options available as well to curb the tide.
One possible strategy for those struggling to make credit payments is to reach out to the creditor directly. In some cases, a credit card company will agree to a temporary interest reduction or a lower minimum payment. This is widely regarded as a good first step toward mitigating debt. In other cases, seeking support from a reputable nonprofit credit counseling agency can be helpful as well. This can help many people in debt learn to budget to make more payments.
Those who face more serious debt concerns may be eligible for a debt management plan. In such cases, the counseling agency negotiates directly with the creditor for a lower interest rate, while the borrower agrees to make fixed monthly payments to pay off the debt within three to five years. This option is separate from a Chapter 13 proceeding, which takes a similar approach though under the supervision of the bankruptcy court.
Of course, for some Kentucky families, the debt problem has become simply unmanageable. In these cases, Chapter 7 bankruptcy may be the most financially responsible move to make. Chapter 7 liquidates assets to help pay down creditors, with the remaining unsecured debt often wiped out altogether.