
American citizens have been utilizing credit cards in record quantities in times and, in the process, have amassed a burden of consumer debt many cannot pay off. High living expenses, financial uncertainty, and the growing use of credit for living expenses have placed many in a desperate financial bind. As payments become unaffordable and compounding interest continues, bankruptcy is the sole option for a break.
The availability and ease with which credit cards can be acquired allows citizens to overspend, underestimating, in many cases, the long-term result of a lingering balance. Most initially have a determination to pay off a charge in a timely manner but soon become a victim of minimum payments and growing interest fees. With an average level of credit card level of interest over 20%, even a relatively small balance can become a burden intolerable. Over a period of years, a debt initially in apparent control turns into a problem with no hope of ever being repaid.
The Role of High Interest Rates in Building Debt
Credit card high-interest rates have reached record highs, offering citizens fewer options for escape for financial servitude. Unlike fixed-interest loans, credit companies vary interest in terms of financial times, and most have increased rates proportionate to inflation. As a result, citizens with a monthly balance pay many times over for an initial, relatively small charge.
Even those who make payments regularly have a problem chipping away at principal through high-interest payments. For a $10,000 at 25% APR, a cardholder can pay out a thousand in interest alone over several years’ worth of payments. Most lenders place many in a position in which minimum payments fall short even of payment of interest, and principal payments go unpaid. That puts them in a position in a state in which debt lasts forever, sending them toward bankruptcy as a desperate alternative.
The widespread use of Chapter 7 Bankruptcy
For those no longer in a position to pay for credit cards, Chapter 7 bankruptcy is a tool for wiping out unsecured debt and a new beginning toward financial solidity. Bankruptcy through liquidation, a bankruptcy, allows discharge of most forms of consumer debt, including medical, credit card, and personal loans. Unlike Chapter 13 bankruptcy, in which payment schedule is a necessity, Chapter 7 bankruptcy brings a new beginning with no long-term financial burden.
The procedure takes a matter of several months, with relatively quick freedom for spiraling payments. Most filers state that, with debts wiped out, a new beginning can begin, and rebuilding can occur with a view toward financial rehabilitation. As much as a bankruptcy will hurt a credit rating, long-term gain will oftentimes have a larger impact for many with spiraling high-interest payments.
And, when bankruptcy is completed, no one can harass them with constant collection of phone calls, lawsuits, and wage garnishments for delinquent credit payments.
The Psychological Impact of Financial Trouble
Debt-related stress affects not only a person’s financial life but also their mental and physical life. Fear of not knowing one can make ends meet, incurring penalties for being in arrears, and having abusive collectors destroys mental peace. Most individuals in extreme financial hardships suffer from anxiety, depression, and insomnia over financial hardships.
Chapter 7 bankruptcy is a chance for a new start, a chance for an individual to have a new realization about financial security free of constant tension of unaffordable financial burden. For qualified individuals, a chance to start over free of financial mistakes weighing them down in present and future times. Having a chance to restructure and build a new, secure financial future, bankruptcy is a feasible option for many with extreme financial hardships.
Knowing when to file for bankruptcy
Not everybody with credit card debt is compelled to file for bankruptcy, but for individuals under lawsuits, garnishments, and even those not in a position to pay minimum financial requirements, it can make perfect sense. For individuals whose expenses outpace earnings and payment seems unfeasible, a consultation with a bankruptcy attorney can unveil a proper direction.
For individuals in Tampa in search of guidance, Weller Legal Group provides experienced guidance in bankruptcy filings. Familiarity with options can make a big difference in getting a new start and long-term financial security.
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