When literary giant Mark Twain went broke and had to file for bankruptcy, he reportedly vowed to pay it all back just as soon as he could.
Today, there is nothing to stop you from repaying your old credit card debts once they have been discharged by bankruptcy. However, our Miami consumer rights lawyers want to make sure you understand that there is usually little to be gained. That includes peace of mind.
While there may be some feelings of guilt associated with a bankruptcy filing stemming from out-of-control credit card debt, this mindset should be reconsidered.
First of all, many credit card companies set countless traps to make it very difficult for you to emerge debt-free. Hidden fees, surprise interest rate hikes and other tactics all contribute to consumer indebtedness. It’s very easy for someone who encounters a rough patch to become quickly overcome with credit card debt.
The second thing is, bankruptcy is not a moral failure. It’s often the most prudent financial decision you can make in order to secure the long-term stability of you and your family. It’s smart, not shameful.
Still, some people may feel strongly that they should one day repay this money. Unless you somehow find yourself ridiculously wealthy, here’s why such a move would be unwise:
- You don’t have to pay it. That is, if you have filed for a Chapter 7 bankruptcy, that debt is gone. In fact, any creditor who so much as tries to send you a “friendly reminder” about that old debt after it’s been discharged can be sued for damages. The court does not take kindly to creditors who disobey strict no contact orders.
- It’s not going to help your credit. Sure, the creditor may be happy to take your money, but it won’t make one bit of difference toward boosting your credit score. That’s because a successful Chapter 7 bankruptcy discharge will result in an order to creditors not to report ANY future account activity on those accounts to credit reporting agencies.Your good deeds will go unrewarded.
- You’re actually hurting your own chances of recovery. Think about it: The whole reason you file for bankruptcy in the first place is because you couldn’t stay afloat. One of the best ways you can prevent this from happening again is to save up a healthy emergency fund. This can cushion the blow for future unexpected expenses. If you turn around and give that money to the credit card company, it only hurts you and may put you in a similarly precarious situation.
- The agency you owed originally doesn’t even own that debt anymore. More than likely, it was sold after the account went past 180 days overdue.
- You probably still have other debts pending. A Chapter 7 bankruptcy is a life raft. It will save you from a financial drowning. It won’t always leave you completely debt-free. The laws became stricter back in 2005, and there are some debts you can’t discharge. Those include child support and alimony payments, student loan debts and certain tax debts. This is where you should direct your focus. That, and then efforts to boost your savings and improve your overall financial health.
If you’re battling credit card debt in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.
Filing for Bankruptcy: What to Know, Federal Trade Commission
More Blog Entries:
Consumer Debts Bought by Third-Party Collections Often Violate Federal Law, July 8, 2013, Miami Foreclosure Lawyer Blog