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How can a person tackle unmanageable credit card debt?

It may have started innocently enough -- a few purchases are made using a credit card and the balance is paid off every month. However, what happens when financial disaster strikes? Perhaps you become seriously ill and find yourself having to use a credit card to pay the thousands of dollars you owe in medical bills. Or, perhaps you are laid off, and find that you must rely on your credit card to pay for the basic necessities of life, like groceries or the electric bill. Soon, the credit card balance becomes unmanageable, and you find that you are unable to pay even the minimum monthly balance. As this shows, even the most hard-working individuals in Tennessee can find themselves in a world of trouble when it comes to credit card debt.

However, there are strategies that people who are facing unmanageable credit card debt can use to address the situation and pay back what is owed. For example, people can use the "snowball" method to pay back debt. This involves paying the smallest debts back first and then moving on to the next largest debt until all debts are cleared. Having some money from each paycheck automatically transferred to a savings account that is used to pay back credit card debt may be another option. A balance transfer to a card with a 0 percent interest rate may also help.

Of course, these options assume that a person does have enough income to at least start making a dent in the credit card debt. Sometimes, a person simply does not have enough income to take even these steps. When this happens, some people choose to file for bankruptcy. By filing for bankruptcy, many of a person's debts can be extinguished, giving them a fresh financial start. In a Chapter 7 bankruptcy, a person's assets will be liquidated and the proceeds used to pay back their creditors. In a Chapter 13 bankruptcy, a person will establish a repayment plan with the court to pay back creditors.

Some people have the income to address their debts in a proactive manner, but others may find that filing for bankruptcy is right for them. In either case, it is important to remember that there are solutions out there for people who are facing unmanageable debt.

Source: Forbes, "6 Tricks To Kick Credit Card Debt Quicker," Clair Tsosie, March 15, 2018

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Mathis, Bates & Klinghard PLLC
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