If you are behind in your credit card debts and are struggling to pay your monthly payments, you may be considering filing for bankruptcy. Bankruptcy can help in these situations, but it often makes sense to file before you reach your breaking point. You do not need to watch your credit rating go down the tubes while you use up your money trying to catch up on high-interest credit card accounts. Filing for bankruptcy now can protect you against more fees and penalties while helping you get back on track faster.
Dealing With Credit Card Debts
Being harassed by debt collection agencies can take a heavy toll on your physical and emotional health. Late payments and high balances do major damage to your credit report, and sky-high interest rates and penalties often cancel out any payments you are able to make. Credit card collection agencies may pressure you to do something to pay off the debt, all of which would likely only hurt you in the long run. When trying to get caught up on credit card debt, you should avoid doing any of the following:
Tapping into emergency savings or retirement accounts;
Borrowing money from your friends and family;
Taking out a home equity loan;
Borrowing money from a finance company.
The Benefits of Filing for Bankruptcy Now
In some cases, you may even be tempted to skip your car or house payment in order to get a creditor to stop harassing you. It is important to remember that credit cards are unsecured debts, meaning they cannot take your property if you do not pay. Your car loan and mortgage are secured debts, and not making these payments could result in repossession or foreclosure.
Bankruptcy can help get rid of credit cards debts and renegotiate the terms of your mortgage or car loan. Filing for bankruptcy does have a negative impact on your credit score, but not filing and having outstanding past due amounts and accounts in collection can be worse in the long run.
If you’re struggling with credit card debt and need help, consider booking a free, no-obligation consultation with one of our licensed insolvency trustees. We’re here to help!