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“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”
The Curse of Long-Term Credit Card Debt
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Written by Craig D. Robins, Esq.Chapter 7 bankruptcy is a way out of the credit card trap. It can mean the difference between getting a fresh new financial start or being burdened by credit card payments for 20 years.
It’s a shame, but too many consumers do not understand the ramifications of bad credit card debt.
Credit card companies try to keep consumers in perpetual debt — that’s how they make money. What’s worse is that many people don’t realize the true cost of credit and the vicious cycle of monthly interest payments.
Take this example. A family who already carries a significant balance on their credit cards wants to buy the latest flat panel TV for $3,000. Of course, they charge it. When it comes to paying the credit card bill, they only make the minimum payment. Assuming that the interest rate is about 20%, it will take them about 39 years to pay that purchase off. What TV is worth that?
On the other hand, if they had no pre-existing credit card debt, they might be able to pay off the TV debt within a few months. This underscores the importance of eliminating pre-existing credit card debt.
For those that qualify, filing a Chapter 7 bankruptcy will eliminate all pre-existing credit card debt, thereby greatly enhancing one’s financial integrity and providing a fresh new financial start.
Here’s another example. Let’s take a Long Island family earning a respectable income of $125,000. For various reasons, the husband and wife let $65,000 in credit card debt build up. If they only make the minimum payments, they will still owe almost the entire amount in 20 years, yet they will have paid about $1 million in interest over that period.
If they qualify for Chapter 7 bankruptcy, their choice would be: eliminate all credit card debt and get a fresh new start — or — pay $1 million in interest over the next two decades and still owe a substantial amount.
Certainly, filing Chapter 7 is an option that should be explored and considered.
