- $100,000 of credit card debt. Can you even imagine having that much debt? Maybe you do have that much credit card debt. In this video, we're going to talk about how to solve that problem of large amounts of credit card debt. But first, if this is your first time here on my YouTube channel, please go ahead and subscribe. On a weekly basis I provide different content on how to deal with really serious and big problems whether it's bankruptcy, whether it's debt collection lawsuits, or whether it's dealing with large amounts of credit card debt, which is what we're going to talk about today. Now to put this into perspective, $100,000 of credit card debt. If you're paying the average interest rate. And nationwide, this is according to WalletHub, they say the average interest rate in the United States right now is 19.02% interest. Which seems kind of high, but that's what the average is across the board on new credit cards, 19%. If you have $100,000 of credit card debt, you're monthly minimum payment is going to be $4,000 a month. So you can see how this could really quickly get out of control.

Now you may be asking yourself, how does anyone get $100,000 of credit card debt? Let me tell you in my law practice what I see, how this typically happens. The first one is business debt. Business credit cards are a little easier to get, at least in high amounts. They may be lines of credit, or lines of credit that have rolled over into a credit card type situation. Where we see that they'll get multiple. You know, it's usually not just one card, but there'll be four or five cards with 15, $20,000 of credit on it. And those get racked up, the business doesn't do well, the business fails. You know, worldwide pandemic happens. And all of a sudden you can't pay your monthly credit card payments. All of a sudden that becomes a big problem. The second area I see is medical debt. A lot of people put their medical expenses on credit cards.

Either because they have high deductibles, which most insurance policies nowadays do have very high deductibles. Or they don't have insurance at all so they put those medical services on a credit card, and then they're unable to pay them. The third area that I see this is where people are consistently supplementing their monthly income with credit cards. So if someone, their salary is $4,000 a month. They're consistently putting $500 to $1,000 on the credit card. And over time it starts to build up and with interest the whole thing just starts to snowball. So it may sound like, hey $100,000 in debt, that's really got to be the exception. It's more common than you think, particularly in my line of business, I do bankruptcy law. I see people routinely that have 50,000 plus and a number of those people get over 100,000. Sometimes up to $150,000 of credit card debt. So the question is, what do you do if you have large amounts of credit card debt, how do you solve that problem? Really you have three options. Your first option is to simply pay it back. This is done through usually something like the Dave Ramsey snowball method.

Something that a lot of people don't know is I'm actually a certified master financial coach through the Dave Ramsey Organization. Which I know is kind of weird because I'm also a bankruptcy attorney. But I believe in that type of method. If it's something where you have the means to be able to pay back your debts over time, using Dave Ramsey's snowball method of starting with the lowest balance and start paying that off, and then taking the monthly minimum that you paid on each card that you pay off and applying it to the next one as you go over time. That's a great method for getting rid of debt. It requires an incredible amount of discipline and it requires a regular, monthly income that can actually pay that debt off. That's where I see a lot of people struggle, is they simply don't have the monthly income.

Particularly right now as we're dealing with this coronavirus, COVID-19 thing going on. A lot of people's income has reduced, their hours are down. And so that makes that type of approach pretty difficult. The second one is to settle the debts. Now debt settlement is generally a decent approach to deal with these things. A lot of the big problems I see is if you have a lot of cards. If you have 50,000 or 100,000 in credit card debt and it's spread out over 10, 15 credit cards, it's going to be pretty difficult. Because you have to get all of them on board in order for the settlement to make much sense. If you don't get them all on board and you settle half of them and the other half sue you, you're not in a much better situation. So if you have a low number of credit cards, you know, two to four, maybe five cards and you have the ability to make offers.

Usually settlement is only effective if you have a lump sum to deal with. So if you have some cash and you can pay anywhere from 20 to 50% of the total amount that they're seeking, they may be willing to settle with you. It's important to note that settlement, at least good settlements, usually only happen once the account goes completely delinquent, either it's charged off or even sold to a junk debt buyer, that's where you're going to get the better settlements.

If you're current on your payments right now and you call up your credit card company and say, "Hey I'd like to pay half." They're going to tell you pounce and you can pay the full amount, or they may give you some kind of you know, forbearance, something like that for a month or two. But they're not going to give you the good deal until it goes negative or til it goes delinquent. The problem with that obviously is it's going to impact your credit. So let's talk about the third option, bankruptcy.

The B word. You know, most people don't want to file for bankruptcy, but it's a very powerful tool for getting rid of credit card debt. If you find yourself in this situation. In the typical Chapter 7 bankruptcy, pretty much all credit card debt is discharged. It's eliminated. It goes away completely, there's not payback, there's no tax consequences to it. It just goes away and is discharged. So if you're dealing with large amounts of credit card debt a Chapter 7's not a bad option of just getting it out completely. It's a relatively quick process, it takes about four to five months. The alternative is a Chapter 13. Chapter 13 is typically when people don't qualify for a Chapter 7 because their income is too high. I can't go into the specifics of income here in this video because those numbers change all the time and it varies from state to state. But I can tell you this, they base it upon your household size and your income. And depending on where you're at there, a bankruptcy lawyer will help you determine if you're able to move forward with a Chapter 7.

If not, you're looking at a Chapter 13 or you'll be required to pay back a portion of that debt over a 60-month period. At the end of the 60 months if there's any balances still remaining, that would be discharged or eliminated completely at that point. So those are really your three options. You can pay it, you can settle it, or you can file bankruptcy on it. The best thing obviously is to try to avoid getting into that kind of debt. But that's not what I do on this website is help you avoid it, I help you get out of the problems that you're already in. So I appreciate you watching today. If you want to learn more about how to deal with large debts or some of those different options, debt settlement, bankruptcy, or even that Dave Ramsey snowball. I have more videos on this site. Make sure you subscribe and check those out. I know they can help you out. Thanks for watching today..