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New Jersey bankruptcy: Credit card traps consumers hope to avoid

Credit cards often come in handy and can be helpful to build good credit. However, in this economy, more and more New Jersey consumers are understandably using them to get by during hard times. Unfortunately, this can sometimes lead to insurmountable debt. In those instances, bankruptcy may be a feasible way out.

When the economy was good, most New Jersey consumers with credit cards were able to easily avoid the major pitfalls of using credit cards such as using a credit card at an ATM, the paper cash advance checks, or using a credit card designated for balance transfers for purchases. However, these traps can be difficult to avoid in today's economy. As a result, many consumers find themselves 60 days or more behind on their payments.

When a consumer gets behind on their payments, they may find that their interest rate has been increased to an unthinkable percentage. New Jersey consumers who have fallen into any of these traps may find themselves now drowning in credit card debt. The question then becomes what to do about it.

Through no fault of their own, people who are buried in credit card debt also tend to have other debt that is weighing heavily on them. Fortunately, there are several options open to consumers who are having an economic crisis and are unable to pay their bills. For those who are drowning in debt, bankruptcy may provide a much-needed life preserver.

The United States Bankruptcy Code and Washington state laws provide certain protections for consumers who are overwhelmed with debt. The two types of bankruptcy protection most often sought by individuals are Chapter 7, which is a complete liquidation, and Chapter 13, which reorganizes debt and puts the consumer on a court-monitored and approved payment plan to repay at least a portion of debt. Speaking to an experienced attorney about your options may be a good place to start.

Source:, "7 credit card pitfalls to avoid," Andrew Housser, Aug. 31, 2012

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