– $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..