Bankruptcy and Credit Card Debt

Bankruptcy and Credit Card Debt

Eliminate credit card debt through bankruptcy or pay it off? That is the question. For many consumers, though, it is a loaded question. They would like to pay off their credit card debt, but they can’t. And they know it. What, then, to do? Eliminating (or discharging it in bankruptcy parlance) is the only viable option for many.

Credit counseling often provides tips to reduce your credit card debt. Tactics such as paying off high interest credit card debt first is a prudent policy. Eliminating non-necessary expenditures and creating a budget are others. But the bottom line is it takes money to pay off your debt. If you don’t have it, you can’t do it.

Paying only minimum payments will get you nowhere. It’s only financial benefit is to the credit card industry. Using this credit card debt calculator confirms for many that there is no way to pay off their credit card debt. Ever.

Bankruptcy viablity takes into consideration a calculation, too. As addressed in other areas of this website, there is a cost-benefit analysis in determining whether a bankruptcy is worthwhile. Is it better for your financial well-being to have the amount of debt you have and no bankruptcy? Or would it be better to file bankruptcy and eliminate your debt? That is the real question to consider.

Obviously, too, your income, housing costs and other living expenses are part of this financial evaluation. These issues dictate whether you can repay your debts. If you can’t, bankruptcy may be your only option.

If you can pay off your debts, bankruptcy may not be necessary. For those unable to afford repayment of their debts, bankruptcy operates as a safety net to eliminate (discharge) those debts. Were you able to afford your credit card and other consumer debts, you would. But bankruptcy is about what to do when you can’t pay your debts.

Most considering bankruptcy realize their financial fate without bankruptcy. That is why they file. And for those who do file bankruptcy, their financial freedom and credit are actually restored. After all, it is better to have a bankruptcy on you record with no debt than more debt than you can afford to repay.