Options for dealing with credit card debt?

Regaining control over credit card debt is an important step toward improving your finances.

A recent report by NPR and ProPublica determined that one in ten individuals working across the country is having their wages garnished due to some type of debt problem. Some of these individuals are seeing 25 percent of each paycheck being seized by creditors to pay off outstanding debts.

Many of these collections are being made on behalf of credit card companies. These companies are often very aggressive at collecting on past-due accounts. As credit card debt once again is on the increase, several individuals may find themselves experiencing severe financial hardship if they are unable to pay down these balances.

Those who are notified that they have fallen behind in their payments have options that may be available to them. They may try to negotiate with the companies to reduce the outstanding balance, but, the credit card companies may be reluctant to enter into this type of arrangement. They may insist that the cardholders pay back all of what they owe. Even if the debt is settled, there may be tax consequences for the amount that is forgiven, which can still cause financial problems down the line.

Debtors may try to find cards with lower interest rates, but, this may only be a temporary solution. These low, introductory rates usually only last for a short period of time, meaning that the individuals may have to pay off the balances much faster before excessive interest rates are imposed.

Filing for bankruptcy may also help eliminate credit card debt. When a person files for bankruptcy, any pending collections actions, such as wage garnishments, must stop while the process is ongoing. This can provide individuals with a crucial opportunity to rebuild their finances, while helping them eliminate their debt problems once and for all.

If you are struggling to make your minimum credit card payments, you should speak to an experienced bankruptcy attorney about how you can regain control over your debt. Your attorney will be able to offer you advice that is specifically focused on the actual problems you are having, which can help you understand exactly what you need to do to prevent these issues from happening again in the future.

You might have several questions about whether or not bankruptcy is the right choice for you. Once you gain an understanding of the process, you will be able to clearly determine if filing is the right way to handle your current credit card debts. The sooner you have this conversation, the more options you will have available to you. If you wait too long to take any action, the amount that you owe will only increase, making an already difficult situation much worse.

Keywords: credit card debt, bankruptcy