Many debtors have questions about whether filing Chapter 7 bankruptcy is the right choice for them. Recently on our bankruptcy forum a user asked, “If I have I have $6,000 in credit card debt and no income, can I file Chapter 7 bankruptcy?” Although you may be legally allowed to file bankruptcy to discharge $6,000 worth of credit card debt a better question may be whether or not it’s the best option for you. Let’s review some of the issues you should consider prior to filing Chapter 7 bankruptcy.
1. Can I file bankruptcy for credit card debts?
Consumers with limited incomes are generally allowed to file Chapter 7 bankruptcy. If you file Chapter 7 bankruptcy generally many types of unsecured debts, including credit card debt, can be discharged.
2. How much does it cost to file Chapter 7 bankruptcy?
First, before deciding whether or not to file bankruptcy it is important to review the costs to file. For example, assuming you are filing bankruptcy without a lawyer, you will still have to pay for the filing fee ($335), the credit counseling course ($50), and the financial management course ($50). Hiring a lawyer, however, will be much more expensive. In fact, hiring a lawyer can cost upwards of $750 or more.
But financial costs are not the only costs which should be considered. Have you considered what a bankruptcy filing will do to your credit score? Have you considered how long the bankruptcy will remain on your credit report, making it more difficult to borrow money, rent an apartment, and buy a home?
So before deciding whether you want to discharge $6,000 it is important to ask yourself what price you are willing to pay both financially and non-financially.
3. Have you considered your alternatives to Chapter 7 bankruptcy?
Americans today seem to love to take the easy way out. Before filing Chapter 7 bankruptcy for $6,000 of credit card debt consider your alternatives. Could you get another job and repay the debt? Could you cut your expenses, budget, and create a payment plan that would repay the debt within a few months? Do you have a family member or friend who may be willing to loan you the money? Could you sell something and repay the debt?
Although filing bankruptcy may seem simple and easy, many debtors find that if their debts are the result of uncontrolled spending that filing bankruptcy does not solve the problem. In fact, many debtors file bankruptcy only to find themselves in the same situation in a year or two asking whether they can file bankruptcy a second time.
Before filing bankruptcy consider all of your alternatives. Find out how much bankruptcy truly costs in time, effort, money and hassle. Determine if you could repay your debts with a little discipline and hard work. Identify what actions and behaviors you have which may be contributing to your financial situation. My advice- with only $6,000 of credit card debt bankruptcy is too high a price to pay.
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