Credit card debt is a common part of life in domestic households. We use credit cards to pay for things that we should be able to pay for over time if everything in your financial life goes in its expected direction. A financial emergency is what may throw your credit card debt management plan into a difficult mess. If you cannot afford to make your minimum payment to your credit cards, it will go into default and eventually could result in legal action to collect the debt from you. A bankruptcy may be the best way to get rid of your credit card debt if you are in a financial situation where you do not see any funds coming in to help your situation in the future. A Chapter 7 bankruptcy can discharge all of your credit card debt without any limit to the debt amount. The Chapter 7 is the most common consumer bankruptcy to deal with unsecured debt.
A discharge will eliminate the debt in a bankruptcy, but what if you don’t have the money to start a bankruptcy filing immediately? How do you manage your minimum payments and other debt obligations while you are trying to save money to file your bankruptcy. Do you have to pay your credit card payments in this situation? Planning for a bankruptcy does not give you the legal right to stop making payments to your credit cards, but, if you are looking to file bankruptcy, it is a safe assumption that you are not in a situation to be able to afford to make your payments. Our law office would never advise any of our clients to stop making payments if they are able to afford them, but, then again, most of our clients are in an insolvent financial situation where monthly expenses exceed monthly income. So, if you can afford it, you should try to meet your debt obligations, but if you cannot afford it, do whatever you can to file the bankruptcy as soon as possible while you are not able to make payments. When your bankruptcy petition is filed, you will not need to worry about legal activity while you cannot afford the payments because you will be under bankruptcy protection which will stop all collections activity.
How will continuing to make credit card payments look on your credit report? Continuing to make payments may allow for slightly easier impact on your credit report because there will be less late payment entries on your credit report in general. Although a bankruptcy will impact your credit scores, recovering may come faster after bankruptcy if you have less late payment entries to begin with. Filing for bankruptcy does not mean that you should completely disregard your credit scores. You will be able to start over with a bankruptcy, but you may be able to recover faster after a bankruptcy with less derogatory entries on your credit report.
Contact Bankruptcy Law Professionals to talk with our Riverside Bankruptcy Attorneys or our Orange County Bankruptcy Attorneys. We serve all of the Inland Empire, Orange County, and Los Angeles areas. To get more information on this topic or anything else bankruptcy related, please feel free to contact us at (855) 257 – 7671. Please contact us at the same number to set an appointment with our attorneys or start a phone consultation.