Your Credit Card Payment Just Doubled. What Should You Do?

Paying off costly credit cards has never been easy. However, it is about to get harder. The Office of the Comptroller of Currency has begun pressuring credit card companies to raise monthly minimum payments from 2% to 4%. Most credit card companies are falling in line. So, what do you do if you are struggling to pay your minimum now?

When you are having trouble paying your bills your first call should be to an attorney. Unlike mortgage brokers or credit counselors attorneys are bound by the ethics code of The Supreme Court of the State, which the attorney is located. Attorneys are not salesman trying to sell you a product. We will give you the positives and negatives of all of your options. Bankruptcy is not an option for everyone, but it is the answer for more people than you think.

Many Mortgage Brokers are encouraging individuals to use equity in their house to pay credit card debts. However, does it make sense to incur more debt to get out of debt? Or would you risk your home to pay off a credit card?

What many people fail to realize is that is that a home equity loan is a mortgage secured by your house. If you are unemployed, sick, or unable to make payments on a home equity loan for any reason you can lose your house to a foreclosure sale. Credit Cards are unsecured debts, which if you miss a payment in most cases cannot do anything more than call and harass you. Is it worth the risk?

Many Credit Counseling Agencies do not do anything that you can’t do for yourself. Credit Counselors often charge expensive fees and in many cases can cause your credit to get worse before it gets better. Credit Counseling relies on the credit card companies to voluntarily reduce balances or interest rates. However, in many cases credit card companies refuse to do so, because credit counseling agencies have no authority over credit card companies. Furthermore, Credit Counseling Agencies fail to tell you they are not paying your bills until they settle your debts with the creditors. So in the meantime, your credit is getting worse. Before you use a credit counselor you should try to call some of your creditors and settle these debts on your own and save the fees.

So why is bankruptcy a better option than a Home Equity Loan?

1. In a bankruptcy we can protect up to $36,900 of equity in your home and either eliminate or reduce your credit card debts dramatically.
2.  In most cases the reduction of your credit card debts can improve or mitigate the negative affects of bankruptcy.
3. The same banks that want you to use up your equity to payoff credit card debts will be lining up to give you credit cards after your bankruptcy, because they know you can’t file again for 8 years.

So why is bankruptcy a better option than Credit Counseling?

1. In most cases, you pay less in fees for a bankruptcy than you would pay for credit counseling.
2. When you file bankruptcy you do not have to rely on the “good will” of the Credit Card Companies to reduce or eliminate your debts. The Credit Card Companies are required to abide by the bankruptcy courts ruling.
3. Once you file for bankruptcy your pre-petition creditors are prohibited from reporting to the credit reporting agencies.

You should explore all of your options when your minimum credit card payments increase and a call to an attorney is a good start. Bankruptcy is not right for everyone, but if you contact a Debt Doctors Attorney you can be sure we will give you honest advice about home equity loans, credit counseling, and bankruptcy and not try to sell you on one option or another. At the Debt Doctors our main goal is to give you honest advice based on your financial situation and provide you with enough information to allow you to make an informed decision whether bankruptcy is right for you.

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