Many families nationwide, including in Louisiana, have high levels of credit card debt. Some land in a spiral of debt that can become overwhelming, but many consumers will avoid filing for bankruptcy at all costs. If credit card debt payments go unpaid for three months, the lenders will likely hand the debt over to a collection agency. The debt collectors may expose the consumer to all kinds of harassment.

If they fail to collect the money, the agency may proceed to file a claim in court. This may be the worst-case scenario and could end in court-ordered wage garnishment or the seizure of assets. However, consumers have a way to prevent this situation by filing for bankruptcy. The moment an individual files for bankruptcy, an automatic stay is entered that will put a stop to any debt collection actions.

If the consumer earns a monthly salary, Chapter 13 bankruptcy may provide an opportunity to get rid of the credit card debt. This option involves the individual paying debts over an extended period of between three and five years according to a court-approved repayment plan. The Bankruptcy Code will protect the consumer’s assets, such as a house or car, and if payments remain current during the reorganization period, any remaining debt may be discharged.

Louisiana consumers with debt problems may find it beneficial to consult with an experienced bankruptcy attorney to discuss their financial dilemmas. After assessing the client’s unique circumstances, the lawyer can explain the available options. With appropriate legal guidance, the consumer may be able to achieve a fresh financial start.

Source: investopedia.com, “Worst Case Scenario For Credit Card Debt“, Chris Neiger, Accessed on Dec. 10, 2016