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New Mexico Lawyers Serving New Mexico's Legal Needs Since 1997

Drowning in credit card debt? Lifelines are available.

Today let's shine some light on credit card debt. People do not share their credit card balances with friends and family members, considering it private. Some see the use of credit cards as a sign of weakness, but consider that credit cards have allowed some people to survive through tough times like job loss or medical crises.

Take the bull by the horns

Even if the reason for high credit card balances is more complex, what matters is that the cardholder take a hard look at resolving the problem. With outrageous interest rates and late fees, even if the consumer usually makes the minimum payment on time, it can take years to whittle away the balance. When due dates are missed more and more, it may negatively impact the person's credit rating.

Scope of the problem

According to CBS News Moneywatch in an article reprinted from ValuePenguin, the average amount of U.S. household credit card debt is $5,700, so we are struggling with this collectively. For people who do not completely pay them off every month, the average household amount is over $16,000.

Positive steps

The article discusses helpful actions:

•· Make a budget and stick to it.

•· Stop using credit cards completely.

•· Do not use all of your money to pay cards off at once; keep enough for unexpected emergency.

It also may be possible to negotiate with a credit card company to have the amount due reduced in exchange for paying it off completely or to allow the consumer to enter into a special debt liquidation program. For example, the card would probably be closed for use, but the debtor would be allowed more manageable terms until it could be paid off, such as lower payments and lower interest.

Consider bankruptcy

Finally, the answer may be to get a fresh start through Chapter 7 or Chapter 13 bankruptcy. In Chapter 7, the debtor can keep certain property that amounts to a modest household, with the rest being sold to pay down debt and the remaining balances being extinguished or discharged. Many people do not own enough property to even have to liquidate, in which case the balances are discharged without property liquidation.

For people with regular incomes, Chapter 13 is a way to reorganize debts into a manageable three-to-five-year plan of repayment, with the remaining balances then discharged, for the most part.

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