Credit card debt exerts a heavy financial burden on most American households, including thousands of households right here in Pennsylvania. In fact, according to credit rating agency TransUnion, the average Pennsylvanian has about $4,600 in credit card debt. The question is, how much credit card is too much? And at what point should filing bankruptcy become a consideration? Continue reading to hear bankruptcy attorneys in Philadelphia discuss bankruptcy and credit card debt – including what can happen if you run up your credit cards before filing bankruptcy. We’ll also discuss how much credit card debt is too much and what you can do to remedy that.
What is the Minimum Debt to File Bankruptcy in Pennsylvania?
A credit card can be a double-edged sword. On one hand, credit cards are a convenient way to build credit, enjoy greater financial flexibility, and pay for everyday expenses, all without the hassle or danger of carrying cash around. On the other hand, credit cards can lead even the most responsible cardholders to unintentionally rack up huge amounts of debt.
Contrary to popular belief, credit card debt doesn’t always result from excessive shopping and overspending. Even if the cardholder spends within perfectly reasonable limits, an unforeseeable setback, such as an injury or the loss of a job, can make it burdensome if not impossible to keep up with monthly payments. Then, once a cardholder falls behind, penalties like fees and high interest rates begin to accrue. In many cases, it’s only a matter of time before these penalties snowball into a financial catastrophe for the cardholder.
The good news is that bankruptcy can reduce or even erase your credit card debt. But is bankruptcy truly necessary in your situation?
The answer to that question depends on a few factors, including how much credit card debt you have, how much debt you have from other sources, and what your overall financial goals are. When you contact the Philadelphia Chapter 7 bankruptcy lawyers or Chapter 13 bankruptcy attorneys of Sadek Bankruptcy Law Offices for your free bankruptcy consultation, we can talk about all of these issues in detail, including other important information like your income and assets. Because our law firm handles both bankruptcy and alternatives to bankruptcy, we are thoroughly prepared to help you compare your options in depth.
Without knowing any information about your debts, income, or assets, it’s impossible to gauge whether filing bankruptcy would be the best and most appropriate way to address your credit card debt. However, in advance of your consultation, we can offer some general information about eliminating credit card debt with bankruptcy:
- Alternatives to bankruptcy could work better for you. Bankruptcy is great for certain debtors, but isn’t the ideal approach to every situation. For example, if you’re struggling to make your minimum payments, you might be a good candidate for debt consolidation. It’s important to review your options with a Philadelphia bankruptcy alternatives lawyer who can educate you about the short-term and long-term consequences of each financial strategy. Depending on how deep in debt you are, budgeting more aggressively and making simple lifestyle changes could be enough to solve the problem.
- There is no “minimum amount of debt” to file bankruptcy. Your credit card debt does not need to meet a minimum threshold before you file bankruptcy. Some debtors have a few thousand dollars in debt, while others have tens or hundreds of thousands. However, there are maximum thresholds. If your unsecured debt (which includes credit card debt) exceeds $394,725, you will be prohibited from filing Chapter 13. But with that in mind…
- Debt isn’t the only reason to file bankruptcy. Even if your total amount of credit card debt is relatively low, filing bankruptcy could still be advantageous for other reasons. For example, bankruptcy’s “automatic stay” can put a stop to debt collectors and utility shut-offs. If credit card debt has caused you additional financial problems, such as difficulty paying off your mortgage or car loans, bankruptcy can also help you avoid foreclosure and repossession.
Ultimately, there are many reasons to consider filing bankruptcy, even if credit card debt plays only a small role in your financial difficulties.
Using Credit Cards Before Chapter 7 or Chapter 13 Bankruptcy
As a final word of caution, it’s a very bad idea to run up your credit card before bankruptcy, both a legal and financial standpoint. The reason is simple: it’s a form of fraud.
If you intentionally run up huge credit card charges with the intent to file bankruptcy afterward, your credit card company can file a complaint asking the bankruptcy court to deny your discharge, which is what eliminates the debt. If the bankruptcy court agrees with the credit card company, it will declare your credit card debt to be non-dischargeable, which means you will not be able to wipe out the debt.
If a debt is declared non-dischargeable, it has to be paid off. Only dischargeable debts – which credit card debts typically are, absent fraud or other problems – can be wiped out in bankruptcy.
Philadelphia Bankruptcy Lawyers Can Help You Eliminate Credit Card Debt
Don’t let anxiety about credit card bills continue to control your life. If debt is causing problems for you, help is available 24 hours a day, seven days a week. Get the fresh start you deserve by filing Chapter 7, filing Chapter 13, or exploring alternatives to bankruptcy in Pennsylvania.
To learn more about eliminating your credit card debt in a free and confidential legal consultation, call the Philadelphia credit card debt lawyers of Sadek Bankruptcy Law Offices at (215)-545-0008 today. We proudly serve Philadelphia County, Delaware County, Montgomery County, and beyond.