Whenever the topic of bankruptcy is brought up, most people, including people on Long Island, New York, assume that it has something to do with having no money. However, personal bankruptcy, such as Chapter 13 or Chapter 7, can actually save them from unexpected financial challenges that can otherwise leave families peniless. Some of these financial struggles may include household debt, unpaid medical bills and ultimately, credit card debt.
Credit cards are part of the finances of many American households. In fact, a 2013 study determined that the average household has an outstanding credit card debt amounting to $6,591. While such a debt may not seem surprising because of how readily available credit cards are, it may lead to challenges that the person may not have imagined.
Unfortunately, credit cards nowadays have additional charges, which may roll in to the person’s outstanding balance of debt. According to the report, charges such as late fees are sometimes underestimated by credit card holders who fail to pay their credit card bills on time.
It was reported that credit card issuers are also imposing penalty interest rates as high as 29.99 percent. Such a rate may apply not only to a person’s outstanding balance but also to the cost of new purchases. Circumstances like this may seem relatively innocuous, but once accrued interest gets out of control, it may lead to overwhelming credit card debt and a damaged credit score.
Fortunately, New Yorkers who accumulate a staggering amount of debt may find relief through Chapter 13 bankruptcy. In Chapter 13, or reorganization bankruptcy, a person may pay his or her debts through a manageable repayment plan. The repayment plan will likely demonstrate how the income of the debtor can be used to pay the debts over time. The duration of repayment plans in Chapter 13 may last for three to five years, and the debtor may keep most of his or her property in reorganization bankruptcy.
Source: MainSt, “Sneaky late fees: avoiding the discredit,” Preetam Kaushik, Sept. 18, 2013