Credit card interest rates and minimum payments are skyrocketing. You may feel pressured to refinance your home. Never refinance your home to help pay this type of debt. Chapter 7 and Chapter 13 bankruptcy can provide relief of credit card debt, personal loans, and medical bills.
Given the financial chaos rampant in the American economy, many families are finding themselves unable to pay mounting credit card debt. Employers are laying off and reducing hours, resulting in drastic loss of income to many households.
At the same time, many credit card companies are increasing minimum payments. For just one example, J.P. Morgan Chase has solicited people to transfer balances to their credit card in exchange for a low fixed rate of interest. Recently, however, this company has decided that the permanent low rate of interest is not profitable, and they have increased the minimum payment from 2% of the balance to 5%, more than double! Many other companies, such as Discover and Capital One are notifying cardholders that their interest rate will triple (unless they close their accounts).
This type of action is creating a perfect storm of financial disaster for many families already suffering due to reduced income. What do you do to avoid shipwreck?
First of all, never refinance your home to pay off unsecured debt. Do not put the roof over your head at risk. If you can’t pay your credit cards, you may be harassed and sued, but you will still have a place to live. In Texas, even if you get a judgment against your home, as long as your home is exempt under the homestead laws, a creditor cannot take your home to pay the judgment. There are other adverse consequences, of course, to having a judgment against your home, but you are not in danger of actually losing your home.
If you qualify for a Chapter 7 bankruptcy, you can totally wipe out unsecured debt, such as credit cards, personal loans, and medical bills. No one wants to file bankruptcy, but sometimes filing bankruptcy is the only way to calm the troubled waters and establish financial stability. Even if you do not qualify for Chapter 7 bankruptcy, a Chapter 13 (debt reorganization) may help you pay off credit card debt by forcing your creditors to permit repayment of only a portion (sometimes none) of your debt with no interest, late charges or penalties over five years.