Overwhelming debt can arise from many sources including unexpected medical bills or auto repair costs, the loss of employment and inability to keep up with payments, or even simply overspending through the use of credit cards. Credit cards can be one of the easiest traps to fall into as many consumers fail to comprehend the significant interest rates they may be agreeing to pay.
For New York residents that accrue high amounts of credit card debt, there are many solutions that may assist them in relieving their situation. At a basic level, some consumers may benefit from simply making a realistic budget and adhering to it. If the situation is direr than that, debtors may benefit from directly addressing their situation with their creditors or refinancing their existing debt. If creditors refuse to work with a debtor – or if they have missed too many payments for the relief outlined above – they may enter credit counseling or even a debt management plan to lower their payments or interest rates.
For certain debtors, none of these solutions are appropriate for their specific situation. These consumers may find that filing for bankruptcy provides them with the quickest path to debt relief. The most common form of bankruptcy is Chapter 7, which allows them to keep certain assets that are deemed exempt, while liquidating the others to pay off as much of their debt as possible. For those that don’t qualify for Chapter 7, or that have a steady source of income, filing for Chapter 13 bankruptcy may be more appropriate. This form also allows them to keep certain property, while paying off their remaining debt through a repayment plan.
Regardless of their specific circumstances, those facing large amounts of credit card debt have various options available to them. Consulting with a financial professional or a debt relief attorney will allow them to assess their situation and pursue the best course debt solution to get back on solid financial footing.
Source: Federal Trade Commission, “Coping with Debt,” accessed on Oct. 18, 2015