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Bankruptcy could be a solution for overwhelming debt

In 2012, the Network Branded Prepaid Card Association and the National Foundation for Credit Card Counseling conducted a survey that revealed that nearly four out of every 10 people in this country have credit card debt. Many of them struggle just to keep up with the minimum payments, if they can pay at all. For New Jersey residents who are drowning in credit card debt, a multitude of advice is available for paying off that debt, which may work for some people. However, others may need to find relief in the Bankruptcy Court.

Some people recommend that a consumer should pay off the card with the highest rate of interest first, but this can take a significant amount of time. Another recommendation is to start with the smallest debt, which would give an individual a sense of accomplishment as each successively larger debt is paid off. It may also work to spread any extra money over each card. Someone who is already struggling just to meet the monthly bills may not be able to sustain extra payments required for these plans to work.

Many New Jersey residents are simply unable to make such payments. A person's financial situation can continue to deteriorate without some sort of intervention. It is at this point that repayment options will most likely not be enough.

Filing for bankruptcy could be the best option in this situation. Once the petition is filed, collection activities cease until the bankruptcy is over. This gives the filer the breathing room he or she needs in order to make some decisions regarding his or her financial future. Once all -- or at least most -- of the filer's debts are discharged, the party can start fresh with a clean slate financially.

Source: U.S. News & World Report, "3 Strategies to Pay Off Your Credit Cards", Geoff Williams, Oct. 20, 2014

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