Excessive credit card debt can create problems for people trying to get their fiscal house into good shape. Unfortunately, Michigan residents may experience a job loss or unexpected and necessary living expenses that force them to borrow excessively. At some point, it becomes essential to work on reducing debt. Several strategies can help achieve this goal.
Dealing with credit card debt
One first step to take involves ceasing any unessential borrowing. Debtors who continue to drive up their credit card balances will only delay their payoff date and struggle with paying more interest. Coming up with a viable payment plan might reduce debt. Methods like the snowball effect and other popular strategies can be helpful.
Consolidating debts can make managing credit card balances easier. Transferring the current debt to a new card with lower interest can help cut costs and make paying off the debt less challenging. When consolidating debt, it is critical not to run up charges on the cards with zero balances. Doing so can create a worse situation. Those unsure how to deal with debt may work with a credit management and counseling service.
Excessive credit card debt concerns
If credit card debt becomes insurmountable, it might be helpful to explore bankruptcy. A debtor can seek protection from creditors in bankruptcy court. Once the debtor files for bankruptcy, all collection action ceases.
A wage earner may file for Chapter 13 bankruptcy, which involves submitting a payment plan to cover portions of one’s debts. The court may discharge certain debts, such as credit card obligations. Some debtors might file for Chapter 7 bankruptcy, which involves liquidating non-exempt assets to pay debts. Remaining debts may face a discharge. Persons seeking Chapter 7 protection must pass a means test to qualify.