Jump To Navigation

Seattle Bankruptcy Law Blog

Mistakes people make with credit cards

When used like a debit card, credit cards often don't cause any problems. You just spend less than you earn and pay it off at the end of the month, rather than taking money out at the time of each purchase, as you do with a debit card. It's the same general principle.

Where people get into trouble with cards is when they make simple mistakes that can quickly lead to overwhelming debt. These cards are a risk, as they're designed to make money and that often means putting consumers in a problematic position. Some of the mistakes people make include:

  • Paying the minimum every month, which means you pay interest on whatever is left.
  • Leaving a balance on the card, rather than paying off the statement balance each month.
  • Not knowing what fees the card comes with; for example, some cards come with an annual fee and some do not.
  • Forgetting to pay the card off on time. Just one missed payment can generate a lot of extra debt.
  • Putting more on the card than they can actually pay. If you make $5,000 a month and you max out a card with a $10,000 limit, you may start a cycle of debt.

What exactly is a loan modification?

Individuals who are having difficulty paying their mortgage often think that they have no options but to let their home go. This isn't the case though. The process that lenders have to go through to foreclose on your home is quite expensive and involved. This often motivates them to want to try to work with you to help you stay in your home. A loan modification may be an ideal option for you to pursue to get back on track with making timely mortgage payments once again.

A loan modification isn't the same as mortgage refinancing. Homeowners seek out a change to the terms of their existing loan as part of the modification process. Those individuals who move forward with the refinance process end up replacing the original loan that they had with a new one.

What is the CARD Act of 2009?

The Credit Card Accountability Responsibility and Disclosure Act (CARD Act) was made a law by the United States Congress in 2009. At the time, it aimed to reduce creditors' abusive or deceptive practices. The Consumer Financial Protection Bureau (CFPB) enforces this law.

Five different titles comprise the CARD Act.

What is a forced sale and what can I do to avoid it?

If you've fallen behind on your mortgage, then you may have heard your lender tell you that a forced sale is impending. You may wonder what exactly that entails.

A forced sale is another name for a foreclosure sale. It's a process whereby your lender seeks to have you evicted or simply put your home up for sale while you're still living in it.

What to keep in mind when filing for bankruptcy for medical debts

Health care costs here in the United States are staggering. Annual medical costs hover just over $10,345 per person here. It's no wonder that one of the leading reasons why individuals file for bankruptcy here in Washington and elsewhere in the United States is because of their unpaid medical bills. If you're struggling to pay off your medical debts, then you may want to explore what bankruptcy can and cannot do for your situation.

Many individuals refer to a concept called "medical bankruptcy." There's no such thing as this though. You can't file for relief from your medical bills alone. You can if that's truly the only debt that you have, but that's not the case with most individuals as they have other bills. This is why many individuals who ultimately file for bankruptcy include other smaller debts when seeking a discharge of their balances.

What are self-help debt remedies, and what comes after them?

If you purchase something using a store credit card or receive services that you don't pay for, then it's likely that the Washington company that you did business with will call you or send you invoices in the mail to try to get you to pay up. If you don't bring your account current, then your creditor will likely turn your account over to a collection agency to try to collect what you owe. These are both examples of self-help remedies that creditors pursue.

As you may suspect, self-help remedies are most any debt collection practices that don't involve the courts. Creditors generally file a lawsuit to collect on debts that they're owed after they've unsuccessfully tried to collect what they're due.

What items are exempt under the bankruptcy code in Washington?

If you're preparing to or have already filed for bankruptcy, then you may assume that all of your property is subject to being inventoried and liquidated to pay off your creditors. This isn't the case though. Certain items qualify for bankruptcy exemptions under Washington state law. If you have any of these personal property items, then you may be allowed to keep them.

The Revised Code of Washington (RCW) 6.15.010 spells out what type of personal property is exempt from garnishment, attachment or execution here in this state.

What is the average credit card interest rate?

The interest rate is incredibly important when choosing a credit card. If you cannot pay the balance off every month, you're going to need to pay for that loan -- which is all a credit card is, really -- and the interest rate determines how much it costs. Many people who run into problems with credit card debt get trapped in a cycle where they can only afford to pay the interest and they never make any headway on the balance.

While the rate does vary from card to card, you should know that the average interest rate is 19.02%. That is if you are applying for a new card. If you have an account that already exists, the average rate is a bit lower, at 15.10%.

What are my debt relief options?

Facing significant debts can be stressful and emotional. It may blur your vision and mean that you find it difficult to see possible solutions for your situation. Ignoring the problem, however, will only make your financial situation worse. Therefore, you should make sure you learn more about your options.

There are several ways that you take action to tackle your debts. The following are some of the options you should consider first when you start to experience financial difficulties.

Tips for debt prioritization

Being in debt can make even the most focused people lose their perspective. A common reaction to overwhelming debt is to avoid the problem completely and to continue spending as usual. This reaction is so common because facing the situation is painful. It's important to remember that the problem will only get worse if you ignore it. Therefore, the sooner you take control of your finances, the sooner you will feel better.

One of the first things you should do is to consider whether you can start to pay off the debt over time. To do this successfully, you will need to prioritize your debts. The following are some tips for doing this.

Contact Form

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Contact Information

Law Office of Ruth Nelson
7742 14th Avenue NW
Seattle, WA 98117
Phone: 206-633-2517
Map and Directions

Privacy Policy | Business Development Solutions by FindLaw, part of Thomson Reuters.