credit card debt

Solutions to Pay off Debt

January 3, 2016 by arizona

Debt is similar to a mountain that has to be conquered. It takes resolve, determination, willpower, and purpose. There are stories of inspiration all over the internet about people young and old who have managed to pay off debt. Achieving this goal is no small task and they have probably cut corners everywhere they could. There are other options than becoming frugal. That is only going to take so much out of your debt, anyways. Let us try to get a little creative here…

[Read: 14 Signs you’re headed For Big Trouble with Debt]

Pay off Debt with Extra Money

Extra money can mean accelerated debt reduction. There is no better way to pay off debt faster than more money in the household. Ask for a raise; get a second job or a side job. Anything that will put money in your hand to shove toward that debt will do.

Pay off Debt through Consolidation

Consolidation of everything you are paying off is much better than paying everything separately at different interest rates. Find a lower-interest rate consolidation loan and make one payment. This makes it much easier to pay off debt and allows you to push more money at the balance.

Pay off Debt by Prioritizing

This one is simple but often overlooked because it sounds so much like a budget. People cringe at the word budget. Probably because it means “allowance,” and takes us back to our childhood. However, when we prioritize our financial situation and what we purchase, we need to be able to put a value to what that purchase adds to our lives in order to determine if it is worth it. If the purchase is not “worth it” or adds no real value to our lives then the money would better be spent going to pay off debt.

Pay off Debt by Frugal Grocery Shopping

It really does not sound like such a big deal until you look at what you throw away. Try this for a month and I promise, you will look at this a little differently. Do your grocery shopping as you usually do for the month. If you go Daily, every few days, weekly, every two weeks, pick things up here and there, whatever. The only thing you are not allowed to do is throw anything away. If you do, you have to write down on a list how much it cost and place it in a central area where you can find it at month’s end. At the end of the month, clean out your refrigerator, freezer, and cupboards of anything that you opened and has gone bad and write down how much it cost. Add that together and multiply by 12 months. That is roughly what you waste a year in groceries. That could be going to pay off debt.

Pay off Debt by Selling Things

A job borne from some craft you like to do in your spare time to selling something you no longer use is a good place to start. You can sell college books online, too. A few places you can sell are eBay, Amazon, Etsy, and Craigslist. Tophatter is an auction site that will take multiples of an item for crafters. You would be surprised what kind of money your things could bring in to pay off debt.

Pay off debt by Snowballing Payments

Credit cards are the worst in paying off debt and the best to build credit. Many of us have dug ourselves a hole with credit cards alone. This isn’t the simplest way to pay off debt, but it is effective and builds credit, too. An example would be if you had three credit cards at different percentage rates. Card A at 7%, Card B at 12.5% and Card C at 26%. Each card has $1,000.00 on them. The minimum payment is $90.00 on each. You make a minimum payment on Cards A and B and double the payment on Card C ($180). You do this every month until Card C is paid off. Now take the money that you were using to pay off Card C and add it to Card B’s minimum payment ($90+$180). You are now paying Card A at $90 and Card B at $270 a month. When card B is paid off take the $270 and apply it to Card A ($90+$270). You are now paying $360 on Card A and should be about done making payments to pay off debt. It does take willpower when you think that you could use that extra money elsewhere or be tempted to use a credit card, but when you get a credit card paid off, it is a victory.

[Read: Knowing When to Pay off Debt]

Pay off Debt by Cashing out Savings

It is almost ingrained in everyone’s head whoever went to a financial seminar that you should have a savings account equal to six months or more of your income for emergencies. When you look at how much your savings account is drawing in interest against your debts interest, it should make it a little easier to let go of the savings account. Once you pay off debt, there is no reason why you cannot start saving again.

How to Master Your Credit Cards

December 13, 2015 by arizona

Mastering the credit cards used to be difficult for many people. Unless financially savvy, most did not have a clue until it was too late. Now there is so much information out there and so many financial consultants willing to help, that young or old, someone is willing to help the consumer understand.

[Read: How To Dispute Credit Card Charges]

Mastering the Choice of a Credit Card

You need to know how to choose the right credit card that is going to work for you. Here are just a few cards:

Standard Card – revolving balance, no rewards
Balance Transfer Credit Cards – low introductory rate
Reward Credit Cards – cash back, points, and travel.
Student Credit Card – for college students and new to credit
Charge Cards – preset spending limit
Secured Credit Cards – credit is equal to secured amount
Subprime Credit Cards – high-interest card for poor credit
Prepaid Cards – does nothing for credit history
Limited Purpose Cards – used like credit cards with a minimum payment and finance charge
Business Credit Cards – standard business credit and charge cards

Mastering the Research of a Credit Card

Now here is where you are going to put your research skills to the test.

1. Reading the Agreement

Understanding Different Interest Rates
Annual Percentage Rate (APR)
Finance Charge
Prime Rate
Penalty APR
Periodic Interest Rate
Daily Rate

2. Know and understand your fees

Application fee – the fee for the application
Annual fees – fee charged for the convenience of having the credit card
Balance transfer fees – the fee to transfer the balance
Cash advance fee – the fee for the cash advance service
Finance Charge – the monthly charge for carrying a balance past the grace period
Late fee – making a payment after the due date or less than a payment by the due date
Over-the-limit fee – balance beyond your limit
- Return check fee – insufficient funds in checking account
- Foreign transaction fee – for currency made in a foreign transaction

Get to know your credit Card Statement

One of best ways to master your credit cards is to get to know just how to read your credit card statement. You can either have them sent through the mail or get them electronically, once you set up an account online.

A great example I found that explains a credit card statement is “How to Understand Your Credit Card Billing Statement, “at credit.about.com. The article shows what the summary area should look like. It also shows what a payment information area should look like. The monthly interest calculations are pictured so it can be found more easily on the statement. Each section is pictured and explained so that it is easy to become familiarized with the credit card statement.

One of the biggest hurdles to overcome is the ability to master your credit cards instead of allowing them to master you by becoming dependent on them. Try not to carry them unless there is a specific purchase you intend to make. Avoid using the convenience checks or taking out cash advances, as well. They are the most expensive transactions a credit card company offers their customers.

Another way that you can master your credit cards is to keep up with the payment schedule, paying the balance in full, or at least paying the minimum due before the due date. It is best if you keep the purchases you make on your credit card within your budget.

If you are starting to feel like you are being caught up in a credit card merry-go-round, start working towards paying off one card at a time while making the minimum payments on your other cards. This way you will be eliminating your debt and eventually you will become debt free sooner than if, you had continued to pay the minimums on all your cards.

Another way to master your credit cards is to stay on top of them. Know your balances. Whether you are going shopping or making sure that a transaction has cleared. It is a good practice to check your balances. Another reason is to watch your balance for suspicious activity.

To master your credit cards may be as simple as limiting your credit cards. It may be handy to have a fistful of cards, but it is tempting and could cost your credit score. Sometimes it is better to close a credit card account down if it has a high-interest rate. Make sure the card is paid in full before you do this, though. It will have an impact on your score, but a lender looks at your file more than at your score. They will see it was paid prior to being closed.

[Read: Using A Balance Transfer Credit Card]

When you begin to start mastering your credit cards, you need to watch for better deals on interest. If you have any questions about your credit cards you should always contact your customer service. Don’t be shy about it. They are there to explain and help you.

How far are you when it comes to mastering your credit cards?

How to Pay Off Lingering Debt

December 9, 2015 by arizona

Sometimes it can seem that there’s no end to the payments and bills coming through your door. You might feel as if you’re amassing new debts all the time without knowing how to pay them all off. However, with a simple budget and a good plan for the future you’ll soon see that it is possible to pay off lingering debt.

[Read: 10 Financial Fees You Should Never Pay]

Planning for the present and the future

The first step towards managing your finances and paying off lingering debt is to draw up a budget based on your monthly income and expenses. Use a tool such as Mint or just a basic Excel spreadsheet to lay everything down in a layout that works for you. Keep it simple so that you can clearly see any areas where you can reduce your spending.

Control the money coming in

When you first draw up your budget there will probably only be one or two kinds of income. That is, your basic salary and the salary of anyone else in your household. Although it is best to keep this figure as a baseline there are plenty of other sources of income that you may not have considered, such as:

Work bonuses. A lot of us get yearly bonuses, often based on performance or time spent at the company. Avoid the temptation to splurge and use up all of your bonus on a luxury item or getaway and instead use it to contribute towards paying off lingering debt.
Sell unwanted items. Scour your house for old unwanted gifts and household items that you just don’t need any more. Not only will this make you feel good about your house, you’ll also be helping someone who wants to buy second-hand as well as adding those all-important dollars to the bank account.
Take on more work. No one should have to work themselves into the ground, but doing an extra shift every now and then can help boost your bank balance. Tell yourself exactly what you’ll be paying off with that extra money and it’ll all seem worth it. Also, there are jobs that you can do from home – ideal if you only work part time or if one person in the family stays at home instead of going out to work. These can be flexible enough to allow you to work around your existing commitments, and you might be able to learn some new skills at the same time.
Rent out a spare room. If you’ve got the space, renting out a room can provide a steady source of income. Depending on your own lifestyle and location, you might consider doing this for just a few weeks of the year for a quick cash injection.

Once you’ve seen the money rise in your account and you’ve started paying off lingering debt you can give yourself little rewards now and then. Set yourself a goal, such as paying off $5000 of your credit card debt, then treat yourself when you get there!

Control the money going out

There are certain tactics that you should consider when paying off lingering debt. Firstly, order your debts by interest rate and start off by paying off the one with the highest rate. This will stop it from spiralling into a more worrying figure. Also, make sure that you pay off more than just the bare minimum on your credit cards. This is the only way that you’ll make any dent in your debt. You will probably want to contribute more of your budget towards some debts than others.

When it comes to credit cards, it pays to be a savvy shopper. Firstly, try to halt all spending so that you can pay off your lingering debt without making it even bigger. Secondly, look at the cards that you currently have and shop around to see if you can switch to a card that offers a zero-interest balance transfer. Make sure that you check out the fine details, though – the zero-interest only lasts for a short period of time before reverting to a normal rate, so try to get everything paid off in this short time period. The last thing to do with regards to credit and store cards is to alter your own spending habits. Look through your bank statements and see where you’re spending the most money. You may find that there are lots of little amounts going out here and there, such as for coffees or snacks. Cut back on these small amounts and you’ll be surprised how much you save in the long run – every cent counts towards paying off lingering debt. Another handy tip is to delete your card details from online stores. It’s often the convenience of a quick check-out that lures us into parting with our cash.

[Read: Knowing When to Pay off Debt]

Small changes and a better understanding of our money contributes to us leading a better, more controlled financial life.

The Situation with Secured Credit Cards

August 17, 2014 by arizona

When most people think about – or hear about – secured credit cards, they begin to think that a secured line of credit can only be used by people with a bad credit score -it’s not for anyone other than that group of people. That conception isn’t necessarily true! Secured lines of credit aren’t just for people with bad scores – it’s for people who don’t have any score, like students or internationals who don’t have any credit history within the United States. Secured credit cards aren’t just for people with bad scores: it’s for people who are just starting.

So How Do Secured Credit Cards Work?

You place in a security deposit which acts as a form of collateral should you have to default on your payments. Your credit limit on the secure card? It’s based on how much money you deposit. Makes enough sense, doesn’t it? How much credit you get depends on the particular lender, but it normally is between 50% and 100% – sometimes it goes a little higher, but you can expect to be getting somewhere in the above neighborhood of your deposit in credit. (So if your lender offers a 50% rate and you put in $300, you have a credit limit of $150.)

Whatever your circumstances are, a secured credit card can be the right choice for building up your credit for a good financial future. Because you’re taking the risk and responsibility by way of the security deposit, and not the lender, it’s easy to get approved to begin building you score. If you’re worried about what people think – don’t! It’s not as if a secured credit card really looks any different from a normal credit card.

What Card Should You Get?

If you look around, you’ll find people offering secured lines of credit. The organizations that do are everywhere – banks, major lenders and even credit unions probably offer one. What you want to keep an eye on is the fine print: while a secured line of credit can be a smart investment for the future, if you aren’t careful, it can cause more harm than good. Make sure the card reports to every credit bureau in the US (Experian, TransUnion and Equifax) and make sure the APR isn’t so high as to break the bank.

Be sure to apply a little bit of common sense – look for incentives for your future, the lowest rates you can find and the best sort of fee structure. It’s more important with a secured credit card – because all of the benefits that these companies offer are usually tied up in prime (that is, traditional) credit cards.

Start reading into the contract Look at the fees, interest rates, the function of grace periods and other kinds of costs that you wouldn’t normally have to deal with – and look for what will help you in the future.

Does the contract allow you to increase your line of credit over time if you are responsible, and does it have a fee?
Will lender allow you an ‘upgrade’ to a traditional line of credit over time, and will it cost you?
Does the card give any kind of interest or benefits like deposit, points or miles?

Mistakes to Avoid with Secured Credit Cards

A secured credit card is not the same as prepared cards! The deposit made when you are approved for the card is not used to pay off your credit – you need to pay from another account on your credit every month in order to keep your fees from lagging. As always, remember to read the fine print: see what happens to the security deposit after you close the account. You might only get some of it back, you might get all of it back, but be sure that you know what!

Keep an eye on your interest rate! The annual rate is often lower if there are a lot of upfront fees in order to apply for the card, and higher if the initial cost is cheaper – and the lender might ask for different fees depending on their own mode of operation.

Remember that on a secured credit card you cannot negotiate fees. They ignore the credit score entirely – whether you have a great line of credit or a bad line of credit or no line of credit, the fees of a secured credit card don’t take that into account. Also keep in mind that chances are you won’t be getting rewards or benefits for the secured card – look forward to that in the future.

What It Means:

Secured credit cards can be a good way to first build or to rebuild a score of credit – and it’s a slow process. Remember to be patient, and remember that a secured line of credit isn’t a magical, instant fix: it’s something you will have to use responsibly for it to reflect well on your score.

Some Credit Card Truths We All Need To Be Familiar With

August 8, 2014 by arizona

Ask and you shall receive

It is a good thing to have a credit card. For those who know the meaning of credit, it is great to have. For those who are not spendthrifts, it is marvelous to carry around with you at the mall without having to pounce on anything that you feel you need to have. You are the kind of person who needs credit card truths speech.

Have you ever gotten a credit card in the mail and you were so excited that you never even read the terms and conditions of that credit card?

Have you ever gotten your credit card statement and never bothered to look at the interest rates that incur each month? Does it ever occur to you that one day those things you dismiss so easily will be your very downfall?

It never bothers anybody to keep up with things like that until things get tough. When you finally at the end of the year, have thousands and thousands of credit card debt, is when you start to ask questions. Unfortunately, those questions don’t count anymore. They should have been asked the minute you got that credit card in your hands.

Millions of Americans are swimming in Credit card debt, so it is time for some credit card truths.

Sign in Bonus

A great sign in bonus does not mean that you have gotten hold of a good credit card. It only means that it is a great sign in bonus. It is there to lure you into applying for the card. It is not there to play in your favor. The credit company wants your money, not your happiness or excitement and that is a credit card truth.

Good service does not mean good interest rates

The customer representatives are there to help you and if they are courteous and polite, then that is a good thing. What is not a great thing is that even if they offer good service to you when you need it, it doesn’t mean that your interest rates will be good too. Great service is vital for their existence, although not all credit companies have great service.

Keep in mind that the few that have excellent ways of doing things are still credit card companies with one goal and one goal only-to get you hooked to their credit card and of course, generate a lot of money for them. That is indeed one the many credit card truths.

The money won’t pay itself

When you go for shopping sprees and long, extravagant vacations at the expense of your credit card, as long as you can put the money back in, then you are alright. But when you do so and your income is less than making a trip to Europe, then really, how do you expect to pay it back? The credit company is not a charitable organization. It lends you that money; it doesn’t give it to you.

Impulsive shopping/overspending

Spending way too much on money you don’t have is foolish. The implications are later going to haunt you every time you want to buy a car, buy a home or even rent an apartment. Sometimes it is wise to think of the consequences, rather than saying you only live once! These are credit card truths worth mentioning. Using your credit card to buy unnecessary stuff will only lead you to a road full of regret.

Having Credit Cards lead to broken relationships

Another one of the Credit card truths is money can come in the way of two people that dearly love each other than any person can. When one of the spouses is reckless and forgets priorities in the house, the other spouse is left feeling broken and betrayed.

A credit card is the number one factor why most families in America are in debt right now. It comes into the home with good intentions, but ends up wreaking havoc in the homestead that takes years to repair financially and emotionally. So think twice before you go scurrying for a credit card. With it comes great financial attention and responsibility. You have to be very cautious with it.

If you can’t stand the heat, get out of the kitchen

Making payments on time can prove to be tedious, but necessary. Some credit card truths signify commitment. You have to be committed to making those payments promptly because the interest and late fees are the ones which usually accumulate and you end up having a debt bigger than you ever imagined.

The bottom line is if you knew you were reckless with money, why did you get it in the first place? A Credit card has to have the same kind of commitment you have to your other bills, such as rent.

Should You Use 401(k) to Pay off Credit Cards

December 14, 2013 by arizona

Many time individuals come into a marriage with a lot of debt. Many couples want to start off their lives together no longer tied to decisions from their youth with only the future to look at. One way many people see to fix the situation is by using their 401(k) to pay off credit card debts.

Leave Things Alone

To use your 401(k) to pay off credit cards can be more detrimental than you might think. The 401(k) is designed to help you save money for retirement; this cannot be done if you are removing money from your 401(k) to pay off credit cards. This can be a problem for several reasons.

The future is unknown. It may seem like it is not going to matter because you are able to pay everything you need to now. When you hit retirement and do not have a steady income because your retirement was depleted what would you do?
Taxes can be anywhere in the future. It is common knowledge that taxes are not decreasing. Without the ability to see into the future you will not know what tax bracket you will be in. You may end up losing a lot of money because when you were younger you used you 401(k) to pay off credit cards.
The Social Security program is not one that is always the same. As the years change so does the program. At present, the program is headed into a bankrupt situation. This can be devastating for someone who solely depended on this for their retirement income because you used your 401(k) to pay off credit cards.
If you decide to use your 401(k) to pay off credit cards then you need to think about the immediate concerns. The most important concern is that based on which type of retirement account you have you may be paying a penalty fee for withdrawing money. On top of that, income tax is also required from the amount that you have decided to withdrawal. This can cause the money to dwindle more than anticipated and leave you with considerably less money in your account for future use.

How to Get Money Out

There are two ways for a person to use their 401(k) to pay off credit cards. Both of the ways can cause troubles for an individual if they do not know about it up front.

You can take out a loan from your 401(k). This is just like taking out a loan from other places. You will have to pay it back, and it is just transferring debt from one location to another. The desired goal of freedom will not be accomplished because of the transfer of debt. In order to pay back the money you will be using an after tax payment which is different than a before taxes like it is normally withdrawn. In addition, if you use a loan from your 401(k) to pay off credit cards and you are terminated, the balance due and interest will be required immediately as payment in full.
When you are looking to take the money out directly then you do not have to pay it back over time. When you take out money from you 401(k), you usually have a penalty that needs to be paid. Any early distribution can cost you a 10% income tax penalty on whatever money is removed.

Getting money out is simple no matter which way you choose, however each comes with many negative side effects.

Possible Alternatives

The problem is that possible alternatives are not desirable. It seems easy to take out the large amount of funds from your 401(k) to pay off credit cards. However, the best option is truly to just continue with whatever debt payment plan that you have already established. If you have none established then creating one would be the best suggestion that anyone could give you.

If you are looking to pay large amounts of money at once, there are some options. You could use your income tax return, or the two extra paychecks you get per year. These are two ways that you can dedicate lump sums to be placed on to your debts rather than using your 401(k) to pay off credit cards.

Another option might be to ask for help or guidance about how to manage your funds. A debt counselor might be of service in this case.

It might seem simple and enticing to provide a simple way goes getting right of your debt. However, using your 401(k) to pay off credit card is not not always the best idea. There are several pros to doing it, mostly to eliminate those debts. The cons on the other hand are many and can damage your future without you thinking about it.

Are You Moving Towards Bankruptcy?

November 2, 2013 by arizona

There are many strains on the financial side of life at the moment and it has become very difficult for many to make the money that they have coming into the home stretch. There are some very serious warning signs that could tell you that you are need of financial help before you move even closer toward bankruptcy.

Signs

Many people spend many hours searching data to see if there are signs that could warn of impending danger and they are the same in the financial markets. The Association of Independent Consumer Credit Counseling Agencies have conducted such research and have come up with areas that can warn of impending danger. They predict that those that are in similar situations are heading towards bankruptcy.

Credit Cards

These are a way that many people can find themselves in a lot of debt and the credit card companies are partly to blame with the increasing of the amount a person can borrow. Yet, if they are used correctly they can help to build a credit file but if they are miss-used they spell disaster. If you are holding credit card debt and it is more than 10% of your annual income then you are risking your financial stability and could be veering toward bankruptcy. It is a difficult situation to escape from once you have succumbed to the credit card debt. It is even more difficult to escape if you are only paying off the minimum about of the balance each month.

Savings

There are messages everywhere about the need to have some sort of savings, with some suggestions of 3 – 6 months’ worth of living expenses stashed away in case of an emergency, like losing your job. You need to have a safety-net so that you are able to continue to live until you secure future employment. The statistics suggest that if you have no savings or less than the recommended amount then you are not in the best financial position that you could be in.

Everyday Purchases

Do you run out of money before your next payday? Do you put your living expenses onto your credit card? This is an indication that you are living beyond your means and you are heading in the wrong direction. It might be the time that you think about creating a budget to get your finances back on track. You will need to work out what you spend your money on; you might need to cut back some areas so you are able to make your money last before the next pay day.

The original idea of the credit card was to give the user access to an amount that they could use to buy items that were more than they had the money for. It was like a loan, but it has developed into a commodity that is used on a regular basis and this could lead towards bankruptcy.

Minimums

It is important that if you have bills that are spread out over a period of time that you are paying more than the minimum amount of the bill, this is even more important if you are still adding to the debt. You could work out a debt repayment plan.

List all the debts that you owe
List all the interest rates of the debts
Aim to put more money into the debt with the lowest balance
Continue until you have no debts left

Your Job

What would happen for you and your family if you were to lose your job? How would you pay the mortgage or the rent? How would you feed your family?

These questions are faced everyday by people that lose their jobs, and life will be difficult for them to survive until they can find a new job. But their lives will be that much easier if they had some financial planning in place.

It is important to make sure that you are not living beyond your means. It might mean that you can’t afford the latest in gadgets or the trendiest clothes but what it will mean will be one less bill to worry about when you have got limited funds to go around.

Options

No matter what your financial position is there is some way to make it better. You might need to seek advice and work out ways to get out of debt but it can be done. There are services that you will have access to that will help you understand where you need to go, they will not judge you, but they will help you find your path back to better money management.

If you are able to find your way out of debt rather than going bankrupt it will save you a lot of problems in the future. Look at your options before you make any life changing decisions.

Bankruptcy on Credit Cards

September 6, 2013 by arizona

Bankruptcy on credit cards is fairly common in the US. Every year, millions of Americans lose their jobs or experience unanticipated expenses, making it impossible for them to make minimum payments on previously incurred credit card debts without sacrificing the necessities of life, or borrowing additional money to pay older debts. Bankruptcy is a legal procedure designed to stop what might otherwise become an irreversible downward spiral. Making a bad credit card debt situation steadily worse.

The US Bankruptcy Code and Credit Card Debt

There are two Chapters of the US Bankruptcy Code that can provide bankruptcy on credit cards to individuals needing such protection. Chapter 7, often referred to as “total bankruptcy” requires liquidation of all of the petitioner’s nonexempt property, with proceeds distributed to creditors. Chapter 13 involves a court ordered restructuring of all debts, including credit card debts, allowing repayment over 3 to 5 year period.

Filing for Chapter 7 Bankruptcy protection may be particularly advantageous to qualifying individuals with very few or no nonexempt assets that could be liquidated. Chapter 13, the other hand, is a better option for individuals who do not qualify for Chapter 7, or who have substantial assets they would prefer to keep well paying off credit card debts over time.

Petitioning for Chapter 7 Bankruptcy Protection on Credit Card Debt

Filing a petition for Chapter 7 protection against collection actions by credit card companies is a long and somewhat detailed process. Petitioners for bankruptcy on credit cards may it necessary to employ the services of an attorney or a company specializing in the preparation of bankruptcy petitions. Steps in the filing process include:

Declaring whether the petitioner is filing as an individual, jointly with a spouse, or jointly with another party, such as a business partner. If the petitioner files as an individual, protections, which may be provided by the Court will apply only to that individual. A spouse or business partner may still be fully liable for debts they incurred with the petitioner.
Providing evidence that the petitioner has participated in an approved budget and credit counseling program within the past six months.
Paying required fees including the $245 case filing fee, $46 miscellaneous administrative fee, and $15 trustee surcharge (unless the court agrees to waive those charges based on the petitioner’s inability to pay).
Listing all creditors and the amounts of their claims, including any non-credit card creditors.
Identifying the sources, amounts, and frequency of the debtor’s income.
Providing a detailed list of all the debtor’s personal property, real estate, and other assets, including bank and investment account balances.
Declaring which of the above listed assets the petitioner considers “exempt from seizure” under State Law or Federal Law.
Providing a detailed list of the debtor’s monthly living expenses, including such items as food, clothing, transportation, shelter, medical costs, utilities, taxes, etc.

All of the above information must be provided on court supplied forms or schedules. In cases where there are multiple parties to the petition, the forms must include required information for all parties to the petition.

When all required information has been received, and presuming that the court determines that the petitioner meets eligibility requirements, including the “Means Test” requirements as set forth in Chapter 7 of the US Bankruptcy Code, the court will issue an order stopping all credit card company collection activities. That order may not apply to certain other kinds of debt owed by the petitioner.

A Bankruptcy Court Trustee will then schedule a “Creditor Meeting“, normally within 40 days of the completion of the filing. All named creditors are invited to the meeting, as are other individuals not named in the filing, who believe they have a legitimate claim against the petitioner. It is important that the petitioner clearly understand the procedures involved in the Creditor Meeting, which include:

The Court Trustee will place the petition or petitioners under oath.
The Court Trustee will ask a series of questions designed to ensure that all parties to the petition understand the potential consequences of having debts discharged under bankruptcy, including impacts on their credit history and credit score.
The trustee will also ensure that the petitioners are aware of alternatives to Chapter 7 bankruptcy.
The Court Trustee will review written information provided by the petitioner, and require the petitioner to reaffirm the accuracy of that information under oath.
Named creditors and others who believe they have legitimate claims against the debtor are given the opportunity to challenge information provided by the petitioner, and provide their own perspective surrounding the debt owed to them.

Under certain circumstances, the trustee may declare the petition “presumptively fraudulent”, and refer the petitioner to alternate sources of relief such as bankruptcy under Chapter 13 of the Bankruptcy Code. Alternatively, the trustee may summarize the findings of the Creditor Meeting, and pass them along to the bankruptcy judge presiding over the case.

Petitioners for bankruptcy on credit cards go have only credit card debt may then be granted the relief they seek, and restart their financial lives with a clean slate.

Final Thoughts

Individual seeking bankruptcy on credit cards may find the relief they need through the Chapter 7 Bankruptcy process. It should be clear, however, that the path to that relief is not an easy one, and that the path has redundant capacity to root out fraudulent petitions.

What Makes Debt Consolidation The Perfect Solution For Credit Card Debt

May 21, 2013 by arizona

There are many considerations to determine if a particular debt relief program is perfect for a debt situation. It all depends on your financial capabilities in terms of debt payments and also what you are willing to sacrifice to reach your financial goals.

Debt consolidation can be the perfect debt solution for people with credit card debt – especially for those who are concerned about their credit scores. This has the least effect on your credit history and if there will be a decrease, it is only minimal and you can easily recover from it.

In this type of debt relief, the consumer will enjoy a single payment scheme that is often lower than your current credit card minimum payment. This happens because the current debt amount of the consumer will be distributed over a longer payment period. This will allow people to avoid late penalty fees even when they can only afford to pay lower than the minimum requirement.

There is also the high possibility of a lowered interest rate – which is another reason why debt consolidation is a perfect debt relief option. The high interest of credit cards make it a very hard debt to get out of. If you really want to solve this problem, you may want to concentrate on the interest. After all, you are wasting money by paying it off. So the less you pay, the more savings you will get.

However, getting a low interest rate is not a guarantee and will depend on the specific program that you will use as a solution. With debt consolidation loan, this happens by choosing a low interest loan. The requirement to get approval for this is either a high credit score or a personal collateral that is valuable enough to guarantee the loan amount that you will take.

If you choose debt management, however, this is not a guarantee because it will depend on how the debt counselor will get on the good side of the creditor. In some cases, the creditor will agree to lower your interest rate. In most instances, they will only agree if you manage to make your payment current. But nevertheless, the possibility is still there.

Another reason why this debt solution is perfect for credit card debt is because it creates a single payment scheme for the consumer. Instead of juggling and trying to keep up with multiple accounts that you have to pay for, you get to combine them. With debt consolidation loan, you pay off the other debts with the loan you applied for and thus be left with only one debt to pay for. In debt management, you will just send the total monthly payment to the debt counselor who will distribute the funds to your creditors – according to the debt management plan that you created beforehand.

While debt consolidation is without a doubt effective, you need to realize that it all relies on your own ability to stay out of debt. Practice proper financial management so you can conquer your debt problem by never being in the same financial situation again.

Want To Know What Caused Your Credit Card Debt? Read On.

May 18, 2013 by arizona

If you really want to solve your credit card debt problem and never look back, it is imperative that you address the main reason why you are in that predicament in the first place.

Putting yourself in debt only means you had been spending more than what you can really afford. There are many reasons as to why you got into a lifestyle that encouraged you to do that. Surprisingly, some people don’t realize the mistake until it is too late. In some instances, they know what is wrong but they refuse to change their ways. Debt freedom involves changes so you have to find out what has to change.

Among all types of debt, those incurred through credit cards are the easiest to get into and the hardest to get out of. That is because it is such a huge temptation to use. The very nature of these cards allow consumers to purchase things even if they cannot afford it at the moment. That promote irresponsible spending habits. It has all the potential to get you in debt because you are making your purchases reliant on an income that may never come. It is never wise to assume that you will earn the same amount of money in the future. Of course, all of us will aim to increase our earnings but you have to realize that there is also the equal possibility of it decreasing. Our complacency got the best of us so that when the recession hit the US, a lot of us found ourselves with no income to support our basic needs and the credit card debt that we irresponsibly accumulated over the years.

Another possible reason for credit card debt is our mentality of trying to best our peers when it comes to material things – subconsciously of course. That competitive nature and pride gets us to purchase things that we do not need just because our friends have them. Since credit cards allow us to acquire them even if we cannot afford it, we plunge head first into debt while promising ourselves we will pay off the bill as soon as it gets in.

What you need to deal with, in the end, is your attachment to material things. Having a lot of items or the latest gadgets will not define your success. In the end, it is better to have only what you need and be free from debt instead of having all the latest gadgets and be neck deep in debt.

As you identify the cause of your problems, you will realize that it will be a lot easier to spot the habits that you have to change and the lifestyle choices that you need to implement. It also makes it easier to come up with the debt relief program that you will use to get rid of your current debt problem.

If you are concerned about your credit score because you have plans to get financial assistance from a bank or lending company, your best option is debt consolidation. It will allow you to make smaller monthly payments toward what you owe by stretching your debt over a long payment term. Get the best debt relief company in the industry to help you achieve your goals of debt freedom. Commit to the program they will put you through and make the decision to never put yourself in another debt situation.