While separating do’s from don’ts is important at all times, it’s absolutely vital when it comes to dealing with unsustainable credit card debt — because the wrong information or advice can, and usually does, lead to an enormous amount of pain and suffering on all levels: financially, emotionally, and even physically. Indeed, according to Health.com, excessive credit card debt can trigger chronic stress that weakens the immune system, causes headaches and migraines, and sends blood pressure levels through the roof.
If you or someone that you care about is currently staring at an ever-growing mountain of credit card debt, then here are 3 do’s and 3 don’ts that you need to know about bankruptcy for credit card debt:
- DO know that filing for bankruptcy will discharge your credit card debt in most cases. The exception is if it is proven that your debt was incurred through fraud, false misrepresentation, or false pretenses. In such cases, the balance will not be discharged and will stay with you.
- DO be aware that a discharge from bankruptcy only applies to you. It will not apply to guarantors or co-signers, who will still remain liable for the debt. It is very important to keep this in mind to ensure that you do not face unexpected financial and/or personal challenges ahead.
- DO respond promptly and carefully if a credit card company wants to classify that a debt is chargeable instead of non-dischargeable. Failing to respond in a timely manner will result in the court making you responsible for the debt.
- DON’T be intimidated or misled by credit card companies. When they try and scare — make that terrify — you about the financial self-destruct button you will hit after declaring bankruptcy, be aware that they are bluffing. The fact is that credit card debt is considered a “non-priority claim,” which means that credit card companies are at the bottom of the list of creditors, and often don’t get a cent. So yes, the last thing they want you to do is declare bankruptcy. But this is not because it’s not in YOUR best interest, but rather because it’s not in THEIR best interest.
- DON’T under any circumstances “rack up” credit card debt in advance of filing for bankruptcy (e.g. taking out a cash advance, buying luxury goods, going on vacation, etc.). Not only will these debts remain, but you will likely face a criminal fraud allegation. With this being said, it is typically fine to charge normal household items and cover basic living expenses prior to a bankruptcy filing (e.g. gas, groceries, etc.).
- DON’T believe that debt settlement will necessarily lead to a “softer” credit score hit vs. filing for bankruptcy. This is a myth that many debt settlement companies perpetuate. The fact is that once a settlement is reported, it will indeed affect your credit score similar to a bankruptcy filing.
To learn more, contact the Law Office of Charles H. Huber. We will give you the facts you need to make a smart, safe decision on whether bankruptcy for credit card debt is in your best long-term interest. Our experience is your advantage!