Like any kind of debt, credit card debts can rapidly become unmanageable, leaving individuals to confront the harsh possibility of default. What are the consequences when those missed payments start to pile up? Do you have a legal option to protect your rights and financial future?
Defaulting on credit card debt carries legal risks
When you miss payments, credit card companies will first reach out to remind you. They may offer a grace period or payment plan. If you continue to miss payments, several things can happen:
- Late fees and increased interest rates
- Negative impact on your credit score
- Calls and letters from debt collectors
- Potential legal action by the credit card company
In Michigan, credit card companies can sue you for unpaid debts. If they win the lawsuit, they might have the authority to freeze your bank accounts, garnish your wages or impose liens on your property.
It is important to note that Michigan law provides some protections for consumers. For example, there are limits on how much of your wages can be garnished. Generally, creditors also cannot garnish certain types of income, including Social Security benefits.
Bankruptcy can be a viable legal option for your financial challenges
If you are considering bankruptcy as a way to deal with overwhelming credit card debt, you should know that there are two main types: Chapter 7 and Chapter 13.
Filing for Chapter 7 bankruptcy can wipe out most unsecured debts, such as credit card balances. Chapter 13 involves a repayment plan to pay off some or all of your debts over time. Pursuing bankruptcy can provide relief by stopping collection calls and lawsuits, eliminating or reducing your credit card debt and giving you a fresh financial start.
Remember, facing credit card debt can feel isolating, but help is available. Legal support can make a tough situation more manageable. Seeking legal counsel is often a wise step toward regaining control of your financial future.
