Credit Cards and Bankruptcy - What You Need to Know

Credit card problems so bad you're considering filing for bankruptcy? Stop. Bankruptcy is not the only option and it is usually not the best one. You may think that it will prevent foreclosure. You may believe that it will protect your house. But the truth is that credit counseling is the step you should take before you consider bankruptcy.

Why?

Credit card companies earn that outrageous debt because it is "unsecured credit". That means that a credit card company cannot take away your home. They can go before a judge and get a judgement, and the judge in that case may (in very, very rare circumstances) decide that your house must be sold to pay some portion of the bad debt, but filing for bankruptcy puts you directly in to the hands of a judge. The worst case scenario is expedited if you file for bankruptcy.

Credit counseling by one of the many nationwide services representing millions of customers can do the following:

• Reduce the amount you actually owe credit card companies. Counseling services can eliminate 30%-70% of the amount you owe away.
• Counseling services can negotiate your interest rates down to manageable rates. If you are paying 19%-30%, imagine how much easier it would be if your credit cards were only growing at 7% per year, and the principle was 1/3 of what you orginally owed.

So your first step in resolving your credit card problems, protecting your family and saving your home, is contacting several credit counseling services and asking them to specify exactly how they can help you.