With the implementation of the new rules from the Credit CARD Act many debtors are getting a good look at their credit card balances and realizing that they simply will never get out of debt at the rate they're going. Credit card statements provide a toll-free number for credit counseling agencies; but unfortunately they don't offer the type of solutions that many debtors need when faced with financial crisis.
In a recent article featuring debtors who received "help" from a credit counseling agency, the repayment plan required the debtors make weekly payments of $600 for five years to pay off their credit cards. The credit counselor did not instruct them to file bankruptcy (despite that the debtors' own credit union suggested bankruptcy) because according to the debtors' pastor, they had a moral obligation to avoid bankruptcy. There are a few things that are wrong about the solution offered to this couple.
Let's take a look at them:
- There is nothing immoral about filing bankruptcy. The bankruptcy code is based on biblical ideas of debt forgiveness and anyone who understands their bible will understand this fact. Even churches file bankruptcy when they simply cannot pay their debts.
- Paying $600 a week for five years on credit card debt is unnecessary. If the couple had filed Chapter 13 bankruptcy , the credit card companies would have received fair compensation and they probably would have spent less time and money paying on the debt. That money could have been invested in their retirement or an inheritance for their children.
- And finally, at one point the debtors' own credit union told them to file bankruptcy. When your creditors tell you that you need to file bankruptcy, then you should probably at least consider their words and consult with a bankruptcy attorney.