Orange County Bankruptcy Lawyer Blog

Nearly half of all U.S. families are drowning in credit card debt --carrying an average balance of $7,300, according to U.S. News & World Report.

Credit card debt is one of the leading causes of consumer bankruptcies. The Orange County bankruptcy lawyers and the Santa Ana bankruptcy attorneys at the Shakoori Law Group assist residents in the Los Angeles are who are overwhelmed by consumer debt.

5 Ways to Reduce your Credit Card Debt:

1)Pay more than the minimum: Paying just the minimum will add years to the length of time needed to pay off your credit cards and will result in thousands of dollars in extra interest payments. A balance of $2,000 with a 19 percent interest rate will take nearly 8 1/2 years to pay off if you make just the minimum payment of $80 a month. Interest charges would total $1,179. Paying $160 pays the debt in under 2 years and saves nearly $1,000 in interest.

2) Ask for a lower interest rate: Some banks are willing to negotiate, particularly if you have not fallen behind on your payments. Reducing the interest rate on a $5,000 balance from 20 percent to 15 percent will save $300 a year.

3)Don't pay annual fees: In response to the economic downturn and consumer protection laws aimed at banning some of the most blatant practices employed by credit card companies in the past, many companies are now opting to charge card holders with an annual fee. Consider switching to a card with no annual fee. (A word of caution, closing an older, established account, can reduce your credit score).

4) Skip loyalty programs: These programs are good ... for the credit card company. Typically the costs associated with loyalty programs exceed any potential benefits.

5) Cut the plastic and pay cash: Studies continue to show that people are more aware of their spending habits when they use cash instead of credit.

While these tips are all good advice, there comes a time when some consumers need to honestly admit that they are in over their heads. Speaking with an experienced bankruptcy attorney can be the beginning of a fresh start. Chapter 7 bankruptcy in California is available to borrowers who meet certain income-to-debt ratios, while Chapter 13 bankruptcy will permit consumers to establish a repayment plan. Filing for bankruptcy protection will also immediately stop bill collectors and credit card companies from hassling you and your family.