LA residents seek solutions to credit card debt
The spending habits of Americans have certainly changed with the invention of ‘plastic money.’ Credit cards enable people to purchase whatever their heart desires, as long as their balance remains below their approved credit limit. It is not a surprise that an increasing number of Louisiana residents are having trouble paying off their credit card debt. In fact, only 51 percent of the American population has enough money in their emergency savings account to pay off their credit card debt, according to a Bankrate.com survey.
Possible solutions to the credit card debt dilemma
Since everyone’s financial situation is unique, it is important for each debtor to find a solution that will fit their needs. Some possible solutions given by the Federal Trade Commission include:
- Debt relief service: A credit counselor can help a debtor create a budget, deal with creditors and make important financial decisions that may benefit their situation.
- Develop a budget: In order to develop a functional budget, a debtor should make a comprehensive listing of their expenses, income and necessities, such as food and clothing. The rest of the money should be prioritized according to specific needs. If there simply isn’t enough money to cover the minimum payments on the credit card balances, the debtor may want to consider another avenue to relieve their financial debt.
- Contact the creditors: Many creditors are willing to work with clients who have issues making their monthly payments. While some creditors may lower the minimum monthly amount owed, others may decrease the percentage rate.
- Debt management programs: In these programs, the debtor sets aside a specified amount of money each month that will go toward paying off the credit card debt.
Bankruptcy as an option
While bankruptcy is not for everyone, it can be extremely beneficial for people who are struggling with credit card debt. Bankruptcy may allow them to wipe their financial slate clean. There are several types of bankruptcy, including Chapter 7 and Chapter 13.
According to the U.S. Federal Court system, people who qualify for a Chapter 7 bankruptcy must have an income below the state median or pass a means test. The means test will determine how much income a debtor has after deducting all of their expenses from their net income. If the result is below a specified amount, the debtor may be eligible to have some of their debt discharged, or wiped off of their list of financial obligations.
Chapter 13 bankruptcy allows the debtor to restructure their debt. The amount of money that is left over after expenses is distributed to the creditors. The debtor is able to keep their home and other property, but must repay their debt over a specific period of time.
Contacting an attorney for help
Making vital financial decisions can be difficult without the assistance of a knowledgeable legal professional. An attorney can help debtors determine if bankruptcy is the best option in their case. They can then help them through the somewhat complicated process of filing for bankruptcy, completing the requirements and having their debt discharged. EAch cases is different and results may vary.