Can I Consolidate Credit Card Debt?

Most people need to do something about credit card debt. The average credit card debt load has increased to over $7,200 per cardholder. That’s more money than most families can comfortably repay. IN some cases, consolidating credit card debt is the best approach, especially if your credit card debt is significantly below the average. In most cases, however, more extreme measures are necessary.

The more extreme measure is usually a Chapter 7 bankruptcy. Debt consolidation reduces credit card debt over a period of about three years. Chapter 7 eliminates credit card debt in under a year, at least in most cases. This federal debt relief program offers other benefits to distressed debtors as well. Furthermore, a Chicago bankruptcy lawyer exploits loopholes that maximize your fresh start.

Attorney-Guided Debt Consolidation

Debt consolidation throws a drowning debtor a lifeline. The debtor must still deal with deep water and other harsh elements. So, beware of credit card debt consolidation companies that make big promises. Most likely, the company wants to take advantage of a drowning and desperate person.

The debt consolidation window of opportunity is very small. Usually, if debtors are current on payments, banks aren’t very motivated to negotiate. They don’t care if debtors are hard-pressed to pay their bills, as long as they pay them.

Debtors cannot move too early and cannot wait too long. Once the account goes into collections or write-off status, banks are, once again, not very motivated to negotiate. At that point, they’ve turned the matter over to another entity and are willing to let that entity deal with the situation.

Many credit card debt consolidation companies just take your money. But a Chicago bankruptcy lawyer is an effective negotiator, as well as an effective litigator. This combination usually produces good results in debt consolidation negotiations.

Almost everything is negotiable, including credit card interest rate, UPB (unpaid principal balance), and payment timing.

The average credit card interest rate is above 20 percent. A slight interest rate reduction could save your family hundreds of dollars over the course of a few months. Furthermore, many banks are willing to wipe out some principal debt, if it means the debtor starts making regular payments. Banks are also willing to defer payments, thus eliminating late fees and penalties.

A threat to file bankruptcy from a Chicago bankruptcy lawyer makes these negotiations much more effective. That threat may be an empty one, but the bank doesn’t know that.

Chapter 7 Bankruptcy

Debt consolidation is a lifeline. Chapter 7 bankruptcy drains the lake. Chapter 7 doesn’t just reduce credit card debt. It eliminates this debt, along with medical bills and most other unsecured debts.

We mentioned the credit card collection process, like write offs, above. Chapter 7 bankruptcy stops these proceedings dead in their tracks. Chapter 7 also stops lawsuits and all other forms of creditor harassment.

We also mentioned legal loopholes above. These loopholes include lien stripping. When homeowners take out home equity loans and their homes’ values drop, the value usually isn’t large enough to secure the HELOC and the mortgage. Therefore, the judge could reclassify the HELOC as a dischargeable unsecured debt.

Most people qualify for Chapter 7. They must simply complete some brief online courses and have limited incomes. 

Count on a Detail-Oriented Cook County Lawyer

No matter what kind of financial problem you are having, there’s a way out. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. The sooner you reach out to us, the sooner we start working for you.

Source:

newyorkfed.org/microeconomics/hhdc