Credit cards and other revolving lines of credit make it very easy for people to lose control over their finances. A little extra spending each month for a year or two can add up to an insurmountable level of personal debt.
It’s common for people to carry a credit card balance month after month and to lie to themselves about how quickly they can pay off what they owe. People may struggle financially for years when a faster and more permanent solution for their financial hardship is right in front of them.
Filing for personal bankruptcy can eliminate someone’s unsecured credit card debt and certain other financial obligations, but people often delay the process of filing for bankruptcy or try to avoid it. Yet, the following are both strong indicators that someone could benefit from bankruptcy.
1. Struggling to make minimum payments
Once someone has a significant balance accrued on their credit cards, the only way they will regain control is by making substantial payments toward the principal balance on the account. The monthly minimum payment will go largely toward fees and interest and will therefore do little to help someone regain control over their total amount of debt.
When someone has to choose which card to pay or make financial compromises just to make the scheduled payments each month on their credit card balances, they may not ever be able to recover from that debt without help. Balance transfers and other short-term solutions for credit card debts often leave someone owing even more than they did at the beginning of the process.
2. Getting served by a lender
It may only take a month or two of missed payments or the wrong attitude on the phone during a credit card debt collection call for someone to end up served with lawsuit paperwork. Credit card companies can and do take people to court and garnish their wages because they have fallen behind on payments.
Many creditor lawsuits are successful, and people will have the best chance of protecting themselves from the hardship such lawsuits create if they prevent the lawsuit from going to court. A timely bankruptcy filing can temporarily dismiss lawsuits and give someone an opportunity to more effectively respond.
Recognizing the warning signs that credit card debt has become insurmountable can help those trying to regain control over their finances. Seeking legal assistance can also be beneficial if someone is in a position to benefit from filing for bankruptcy.