According to some studies, the average household in America carries some $5,700 in credit card debt. This type of debt, while unsecured and therefore eligible for discharge in Chapter 7 bankruptcy filings, can be one of the most difficult types of debt to retire. Thankfully, there are a variety of strategies that can be employed by Kentucky residents to pay down credit debt before considering bankruptcy.
Balance transfer cards are one of the most popular tools for lowering credit card debt. They work by transferring debt from a high-interest card to one with lower interest. In some cases, the lower-interest card may include the option for a grace period of up to 21 months interest-free, allowing all payments to directly bring down the principal rather than being eaten up by interest charges. However, transfer fees can apply when moving balances between cards.
Consolidation loans are another option, as long as they are accredited, meaning they are vetted by the National Foundation for Credit Counseling. In both cases, it is important to maintain discipline and a strict budget based on household earnings to ensure the balance does not keep rising. Above all, many economists recommend avoiding debt settlement companies, as their practices can seriously impact credit scores.
Of course, for some Kentucky families, these options simply are not enough to counter existing credit card debt. In these cases, a Chapter 7 filing may be the best solution to a debt problem. An experienced bankruptcy attorney can help get unsecured debt like credit cards discharged by the court, allowing borrowers a "clean slate" to focus their efforts on regaining financial security.