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A path to resolving massive credit card debt

On Behalf of | Sep 5, 2023 | Bankruptcy Law

There could come a time when credit card debt becomes impossible to repay. The bills may continue to arrive at a Pennsylvania residence address, and the only thing the person can do is pay the minimum. At some point, paying the minimum monthly amount might become impossible. Additional obligations from rent, utilities and other living costs further create a financial morass. For some, filing for bankruptcy might be the only solution.

Massive credit card debt

It’s not uncommon for individuals to become trapped in a cycle of making payments that never reduce their credit card balances once they’ve maxed out on all available credit. It’s important to note that only some people struggling with excessive debt are in that position because they were reckless with their spending. Medical bills and job losses can force individuals to borrow until they can no longer do so. At this point, credit card debt may become insurmountable.

If someone cannot earn additional money to cover the debts or reduce their budgetary expenses to increase their payments, they could look at years of interest-only payments or default. Defaults could bring lawsuits, creating more problems. So, the debtor might look at bankruptcy as a solution.

Wage earner bankruptcy

Those who are gainfully employed may file for Chapter 13 bankruptcy, also known as wage earner bankruptcy. Unlike Chapter 7’s liquidation bankruptcy, persons filing for Chapter 13 will devise a payment plan they submit to the court. The payment plan provides a three to five-year structured approach to paying certain debts.

The bankruptcy court could discharge all or some of the credit card and other unsecured debt. The bankruptcy filer would no longer have an obligation to pay any discharged debt. Only some debts are dischargeable, but filing for bankruptcy could make dealing with those obligations more manageable.



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