Bankruptcy Should Include Credit Card Debt or Creditors May Collect Up To Ten Years
Des Moines, IA (Law Firm Newswire) March 8, 2013 – A large majority of Americans file bankruptcy because of overwhelming credit card debt. This is because they use their card to bail themselves out.
The worst thing to do is bail out of a cash shortage by using a credit card. It is tempting to use it of course, because it gets one out of a tough situation. However, the balance keeps creeping up and once it gets large enough, there is no way to keep up with it any longer. Some companies charge up to 30 percent interest. Trying to pay on a large bill at 30 percent interest is like being stuck in molasses. The debtor is not going anywhere, despite making the effort suggested Iowa bankruptcy lawyer, Kevin Ahrenholz.
To get rid of credit card debt, one of the existing options is to file bankruptcy. Typically, this type of debt is referred to as an unsecured debt, meaning it is not tied to a lien on something specific, like a mortgage is to a house. In most instances, a debtor may file Chapter 7 or Chapter 13, depending on their income or whether or not they are employed. A Chapter 7 bankruptcy will completely eliminate the debt. A Chapter 13 will whittle down some of the debt.
For whatever reasons, some people do not want to file bankruptcy to get out of their credit card debt. Those that do not follow that route need to know that the statute of limitations on how long unsecured debts may be collected on is not the same in every state. However, it may be as short as three years, and as long as ten years.
That means that for three to ten years, the card company or a collection agency can legally try to collect the debt owed by writing, calling, suing or even garnishing a debtor’s wages. They can even file suit, win a judgment and file a lien against the debtor’s home stated Ahrenholz.
If there is any question about how unsecured debt is treated in a particular state, speak to a qualified bankruptcy lawyer and find out what the existing statute of limitations is. It is better to be well informed of what may be faced if the debtor declares bankruptcy and chooses to leave out the credit card debt.
Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact an Iowa bankruptcy attorney, Iowa bankruptcy lawyer, or set up an appointment, visit http://www.iowachapter7.com or call 1.877.888.1766.
309 Court Ave., Suite 805
Des Moines, IA 50309
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