Kingcade Archives - Page 36 of 48

How Do Bankruptcy Courts Handle Income Tax Debt in Chapter 7 Bankruptcy?

Posted on March 12, 2019by Admin

We have all seen or heard the advertisements promising to significantly reduce or even eliminate tax debt. Many of these companies are offering just that – empty promises, while charging clients unethical fees. Of all the types of debts handled in a bankruptcy case, income tax debt tends to be one of the non-dischargeable categories, along with student loan debt and child support obligations.

However, there are certain tax obligations that can be discharged in a Chapter 7 bankruptcy case depending on the following factors:

When You Can Have Your Tax Debt Discharged in Bankruptcy:

You must have filed a tax return. This must have occurred at least two years prior to the bankruptcy filing;
The taxes must be income taxes. Taxes other than income tax, including payroll taxes and fraud penalties are non-dischargeable in bankruptcy;
You must not have committed fraud or willful evasion. If you filed a fraudulent tax return or attempted to evade paying taxes (i.e. – using a false social security number on your tax return) your tax debt cannot be discharged in bankruptcy;
The debt must be at least three years old. For the tax debt to be eliminated in bankruptcy, the debt must have been originally due at least three years before filing for bankruptcy;
The tax debt must have been assessed by the IRS at least 240 days before you file for bankruptcy.

A Chapter 7 bankruptcy can wipe out your personal obligation to pay the debt and prevent the IRS from garnishing your wages. Whether you should file for bankruptcy may be a matter of timing, depending on the age of the income tax debt. An experienced bankruptcy attorney who specializes in this area of law can best advise you on the next steps to take.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resources:

https://www.nolo.com/legal-encyclopedia/bankruptcy-tax-debts-eliminating-29550.html

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Student Loan Changes on the Horizon

Posted on March 11, 2019by Admin

An estimated $1.5 trillion is owed in student loan debt nationwide, which makes it a pressing issue in the current political arena. In fact, student loan debt is expected to be a major issue in the upcoming election given the fact that more than 40 million American consumers carry student loan debt. The following are some potential changes that borrowers may see in the future.

One of these proposed changes has been to radically modify the costs of attending a public university. Currently, the average student graduates from a state public university with somewhere near $35,000 in student loan debt, which stays with the borrower for quite some time following graduation. This balance goes up even more if the college is out-of-state or private. The House Democrats have recently proposed the Aim Higher Act, legislation which would increase the amount of grant-based federal aid and would also offer financial incentives to states to either reduce tuition or eliminate it altogether at state universities. The latter may seem like a pipedream, but some states, such as New York, have recently proposed laws that would offer free tuition at state universities for students who qualified under income guidelines, so long as the student commits to staying and working in New York upon graduation.

These proposals only deal with students who are getting ready to attend college. What about the others who already have student loans and are struggling to pay them? Proposals have been made to create a federal program that allows borrowers to refinance both their federal and private student loans at a lower interest rate. This possibility could make payments more reasonable for borrowers by lowering interest rates on outstanding loans. However, opponents to this idea argue that a refinancing program would only benefit higher-income earners as opposed to those groups who could benefit from them most.

Another potential change to student loans could come in the form of caps on how much interest can accrue on a loan. Borrowers normally end up paying essentially double what they took out originally by the time interest is fully paid. Many state legislators have proposed capping the amount of interest at a certain percentage of the total original principal balance, making the repayment process more feasible.

At some point, many financial experts advocate that all of the programs in the world will do nothing without addressing the total debt owed already. Student loan forgiveness or cancellation could be seen as a way of not only stimulating the economy but also freeing many from the burden of debt. Programs, such as the Public Service Loan Forgiveness program, already exist, but those only apply for graduates working in specific industries. Other programs could potentially appear with the same goal in mind in the future.

Student loan advocates have been arguing for years that more oversight needs to occur for lending. States, including New York and Massachusetts, have bills that are currently pending which involve this issue, and it is highly possible more states will propose similar legislation.

Reform may also come in the bankruptcy court. Traditionally, student loans have been next to impossible to discharge in bankruptcy. The courts apply an “undue hardship” test when determining if a borrower’s loan obligations should be discharged, but no uniform test exists, leaving courts to vary in their interpretation of the law. The fact that these loans are so hard to discharge in bankruptcy is a leading reason why many people decide not to file for bankruptcy and continue struggling financially. If student loans were able to be discharged in bankruptcy, this change could open the doors to financial freedom for countless borrowers struggling with student loan debt.

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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Bankruptcy Law, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Understanding the Benefits and Disadvantages of Utilizing Balance Transfers

Posted on March 8, 2019by Admin

Credit card debt can be difficult to manage, especially if a card carries a particularly high interest rate. If someone is only paying the minimum monthly payment, it is likely he or she is only paying on the interest accrued that month and never making progress on the principal. One possible option to pay down a high credit card balance is to transfer the balance to a credit card with a zero or lower interest rate. However, balance transfers come with their own set of risks, as well as benefits, which should be explored before someone chooses to pursue this option.

A balance transfer occurs when the outstanding credit card balance from one card is transferred to another one. This transfer is normally done because the new card offers a lower interest rate. Many cards even offer promotional periods of zero percent interest. The purpose of transferring the balance is this period with no interest accruing should give the debtor time to pay down or even completely pay off the balance. It is a simple solution to a complicated problem.

Many cardholders choose to utilize balance transfers if they hold several balances on multiple credit cards. They feel like they are juggling the minimum monthly payments on each card without ever truly making progress. By taking all these balances and transferring them into one card, it can be a way to consolidate debt and make payments easier. After the transfer, the debtor will only have one card to pay rather than multiple cards.

Balance transfers come with their own set of disadvantages and risks, however. Many times, the costs grossly outweigh the benefits of the transfer. Any of these promotional low rates come with a set time limit before the interest spikes back to a rate that may be even higher than the original card. Some of the cards also come with fees and penalties if the balance is not paid before the promotional period expires. If the consumer is not careful, he or she may end up not only with a rate higher than previously held but also zero progress made on the balance.

Some consumers make the mistake of transferring a balance to a new card and making payments while still using the card. If any progress is going to be made on the balance, it helps to not use the card and add to the balance. However, if the person relies on a credit card for daily expenses, it may be wise to use a different card while paying on the card with the balance transfer.

When a consumer applies for a new credit card, the cardholder should expect a hit to his or her credit score, as well. It may not be a significant drop, but it could be if the cardholder already has a poor credit rating. If the balance is not paid off at the end of the promotional period, the cardholder could end up with a card with a high balance and a bad credit score, thus negating the whole point of the balance transfer. It is for this reason the consumer should be sure that he or she can handle making large payments on the balance after the transfer is made. Do not apply for a balance transfer if you do not believe you are up for the challenge of paying down the debt.

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Credit Card Debt, Debt Relief

National Credit Card Debt Hits Record High at $870 Billion

Posted on March 6, 2019by Admin

Credit card debt has hit an all-time high, according to data from the Federal Reserve. As of December 2018, U.S. credit card debt was estimated at $870 billion, which is the highest it has ever been. Credit card balances were also said to have increased by $26 billion from the prior quarter, which is another notable increase.

It is no secret that credit card usage has gone up in recent years. It is estimated that currently 480 million credit cards are in circulation nationwide. The increase reported as of December 2018 is to be expected to an extent, given the fact that credit card usage does go up during the holidays. However, it is still significant that this marks the first time that credit card balances have reached the levels they were at during the height of the 2008 recession.

When it comes to national consumer debt, credit cards come in fourth, behind mortgages, student loan debt and car loans. However, when compared to these other categories of debt, credit card usage has increased significantly more.

The number of credit card delinquencies has also increased. At the end of 2018, 37 million credit card accounts were more than 90 days delinquent. These numbers are up two million from the end of 2017. It was reported by the Federal Reserve that these 37 million credit card accounts add up to over $68 billion of debt that is more than 90-days past due.

Americans over the age of 60 hold a significant portion of this credit card debt. This group accounts for approximately 30 percent of the total credit card debt reported. It is a problem that is becoming more widespread, especially in the Miami area, as more of these seniors are struggling to keep up with daily expenses while living on a fixed income.

As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges. It is not surprising with the high interest rates, unreasonable fees, harassing debt collection calls, penalties and never-ending minimum payments that do not even make a dent in your actual debt. We offer additional tips for eliminating credit card debt on our blog.

Please click here to read more.

Related Resources:

https://www.bloomberg.com/news/articles/2019-03-05/u-s-credit-card-debt-closed-2018-at-a-record-870-billion

Uncategorized

How Seniors Who Are Drowning in Credit Card Debt Can Find Help

Posted on March 5, 2019by Admin

Credit card debt is increasing among individuals over the age of 65. According to a 2018 report from the Employee Benefit Research Institute, approximately 42 percent of all houses where the head of household is between the ages of 65 and 74 carried credit card debt. This figure is a 10 percent increase from 1992 to 2016. When it comes persons over the age of 75 years old, 26 percent of households carry credit card debt, which is a six percent increase from 1992 to 2016.

Not only are more of these individuals carrying credit card debt, but the amount of debt they carry has also increased. For cardholders between the ages of 65 and 74, the average debt on these cards went from $1,174 to $2,500 while the average debt has gone up from $838 to $2,100, which is the highest jump measured to date.

According to the research associate who conducted the study, usually the median debt amount decreases when an increase is seen in the percentage of homes carrying credit card debt. For senior citizens, however, the increase is seen both in how many have credit card debt and how much debt they carry, which leads many to question why the increase has occurred.

Many different reasons can be attributed as to why credit card debt is rising amongst seniors. One reason is the fact that these seniors are relying on a fixed income following retirement. This income is just enough to pay for necessary living expenses, but if any increase in these expenses occurs or if the senior has a medical or unexpected financial emergency, his or her income may not be enough to meet this expense.

Additionally, many seniors come to the Miami area to retire, but they do not anticipate the higher living expenses that they may incur by living in the area. When they are already on a tight budget, they will resort to credit cards to keep up with extra expenses. However, problems arise when they are not able to pay the balance from these expenses from month to month. Health insurance and medical costs can also be an extreme burden for these aging Floridians. The result of this is many of these senior citizens are carrying debt into retirement.

This fixed income can be a combination of a pension, other retirement funds and Social Security. It is estimated that approximately 21 percent of married couples and 44 percent of single adults currently rely on Social Security for 90 percent or more of their income. With the average Social Security check being $1,413, this does not leave much wiggle room. It only takes one financial crisis for that person’s entire financial situation to implode.

Several different steps can be taken to help a senior who is struggling with credit card debt get out of his or her situation. The worst thing that person can do is to ignore the debt in hopes that it will go away. Debt collectors are persistent when trying to get payment on a debt, and they do not discriminate based on the age of the debtor. Ignoring the debt will also lead to higher interest rates, fees and penalties that can make the situation even worse.

If a senior citizen finds that he or she is not able to pay on a debt, many of these credit companies will work with the debtor on a payment plan or settlement on the debt. The cardholder is within his or her rights to work directly with the creditor on a mutually-beneficial resolution, including a settlement on the debt or a lower payment. Many seniors find credit counseling beneficial, as well, in that a third-party will work with the person, review his or her financial situation, and will work with the creditors directly to negotiate the debt. Both of these options come with risk and should be researched thoroughly.

Of course, bankruptcy is always a viable option depending on the situation. A person can spend years struggling with medical and credit debt that would otherwise be eliminated in a Chapter 7 or Chapter 13 bankruptcy case. Someone’s age should not be a deterrent if bankruptcy is the best option for him or her. A bankruptcy attorney should be able to meet with the individual free of charge to discuss his or her financial situation and determine the best path forward.

Click here to read more.

Related Resource:

https://www.nerdwallet.com/blog/credit-cards/seniors-credit-card-debt/

Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Millennials Are Struggling the Most to Pay Off Credit Card Debt

Posted on March 1, 2019by Admin

Credit cards can be an excellent way to establish credit and pay for expenses, so long as the balance stays low and bills remain paid. However, if the balance gets out of hand, it can be very difficult to keep up with even a minimum monthly payment. According to CreditCards.com, Millennials, individuals between the ages of 23 and 38, are running into this exact problem when it comes to their credit card debt.

According to a new poll published by CreditCards.com, one in four millennials say that they have been carrying a credit card balance for at least one year. One in ten of millennials surveyed said they have been carrying a credit card balance for over five years with no end in sight.

Depending on how high the balance is, it can be very difficult to pay off the total amount due. Most monthly minimum payments only end up paying the interest owed from month-to-month. With the average credit card APR at 17.57 percent, it is easy to see how making progress on paying down the principal on the card can be an uphill battle. No matter how hard the person tries, the only progress he or she will make by paying the minimum payment or a small amount above that set payment will be on interest and possibly very little part of the principal.

The average American household has $5,700 in credit card debt. For individuals under the age of 35, that amount is $5,808. It can be very difficult to ever see an end to that balance when only making the minimum monthly payments. When all is said and done, you can end up paying double that balance in interest alone.

Of those millennials surveyed, most said that their credit card debt was from day-to-day expenses, including food, gas, utilities and child care. Others reported that their large balances were a result unexpected car repairs or medical expenses. Unlike previous generations, these young consumers are already struggling in paying other debt, mainly student loans. With the average student graduating from college with $37,000 in student loan debt, most of their paycheck goes to paying for housing and their student loan payments. With less money to put towards other expenses, they may rely heavily on credit cards, but when those balances get too high, they simply do not have the income left to pay off the large balance.

One positive piece of news is the fact that many millennials are already aware of the fact that credit card debt is a big problem. Many are choosing to not take on a credit cards or are spending less on extraneous expenses

While it requires discipline on the part of the consumer, financial experts recommend that an emergency savings fund be built up for these types of situations. Most recommend that you have at least three months of living expenses set aside in a savings account for emergencies. These accounts can be built up over time by you taking a small percentage of your paycheck monthly and depositing it directly into a savings account. That way, the money comes out immediately and the account is able to grow.

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Bankruptcy Law, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Credit Cards Are a Way of Life for Most Americans

Posted on February 28, 2019by Admin

For many Americans, credit card debt has become a way of life. According to CreditCards.com, more than 39 million Americans have carried some form of credit card debt for at least the last two years. While using a credit card responsibly can help establish credit, it can become problematic when the debt accumulates.

Credit card companies camp out at universities, promoting their cards to students at colleges and offering free gifts for those who sign up that day. The problem is, many of these students have no idea how to pay off debt and see these cards as a way to buy products without any consequence. Before they know it, these cardholders are carrying a balance they have no way of paying. According to the survey from CreditCards.com, eight million of those surveyed say they do not remember a time when they were not in debt.

The CreditCards.com survey was conducted by YouGov, who surveyed over 2,500 adults. Of those surveyed, 1,780 were credit cardholders and 1,040 of them carry debt on these cards. These cardholders are not charging unnecessary expenses, however. In fact, most of the individuals surveyed said that they used their credit cards to pay for daily spending on necessary expenses, such as groceries or utilities, or on emergency expenses, including medical bills and car repairs.

The survey also reported that the millennial generation was the group that was the most concerned about credit card debt. Due to their high level of student loan debt, many of these younger consumers are not able to cover their daily living expenses on top of their student loan payments.

While the consumers surveyed who were in older generations who use credit cards to pay off medical expenses, millennials say they have no choice but to resort to credit cards to pay for food and living expenses. When the bill arrives, they are not able to pay off the balance in full.

The key to handling credit cards successfully is to not let the balance get out of hand. If possible, pay the balance down monthly after using the card for required expenses. Since the average interest rate is at 17.55 percent, carrying a balance from month to month can make it nearly impossible to pay down the debt. Minimum monthly payments will only allow the cardholder to pay off any interest accrued during that monthly billing cycle.

If you are struggling to pay off credit card debt, certain tips can be helpful in dealing with the debt. One tip is to not fall victim to companies promising rewards for spending on their cards. If you are paying the balance off in full every month, the rewards offered can be beneficial, but if you are carrying a balance and still using the card to earn rewards on top of the balance owed, you are only making the situation worse. If your credit card has a high interest rate, consider a balance transfer to a new card with a lower interest rate. However, be sure that you know what the promotional period is for that card so that you pay off the balance before the promotional time expires. Otherwise, you may end up with an even higher interest rate when all is said and done.

People living in the Miami metro area, which includes both Fort Lauderdale and West Palm Beach, carry the second-highest credit card debt balances in the country, second to San Antonio, Texas.

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Foreclosures, Timothy Kingcade Posts

National Mortgage Delinquencies on the Decline While Foreclosure Rates Spike

Posted on February 27, 2019by Admin

Mortgage delinquencies are on the decline nationwide, according to the most recent Black Knight First Look report. The mortgage delinquency rate fell 3.75 percent for all loans in the month of January, which is down 3.45 percent from December 2018. While that decrease may not seem significant, it is when compared to one year ago. In fact, mortgage delinquencies are down nearly 13 percent from January 2018.

Black Knight, Inc., provides integrated technology services in addition to data and analytics to mortgage and real estate industries. They provide this First Look report annually to review where statistics are nationally and from state-to-state when it comes to foreclosures and mortgage delinquencies.

According to the report, approximately 1.945 million properties were 30 days or more past due in January 2019. This figure is down 68,000 from December 2018. When compared to January 2018, the numbers are down by approximately 257,000.

Additionally, Black Knight reported that 504,000 homes were at the point where they were considered “seriously delinquent,” which means the mortgages were more than 90 days past due but were not yet in foreclosure. This figure is down 7,000 when compared to December 2018 but 203,000 from January 2018.

Homes that were reported in the pre-sale inventory category, meaning homes that were in some stage of the foreclosure process, were down approximately 60,000 from December 2018 and down 72,000 from January 2018, which is in line with the rest of the trends reported. The foreclosure inventory rate was 0.51 percent of all homes still holding a mortgage. This figure shows a 2.20 percent decrease from the prior month and a 22.43 percent decrease from January 2018.

Interestingly enough, Black Knight did report that approximately 50,200 foreclosures were started in January 2019 nationwide. This figure is actually an 8.42 percent increase, as compared with December 2018. It is still down 19.42 percent, however, when compared with the previous year.

The rate for monthly prepayment was at a 10.15 percent decrease in January, as compared to December 2018. It also showed a decrease of about 25 percent from January 2018, which was also the lowest level reported since before the end of 2000.

Why is the decrease in the monthly prepayment rate significant? A prepayment is a settlement of a debt or installment payment made before the payment’s due date. It can be made for either the entire balance owed or for an upcoming payment that is paid in advance of the due date. The fact that these prepayments have gone down is unusual since prepayments are typically more common when delinquency rates decrease. It would go along with the trend for the prepayment rates to go up rather than the other way around.

Black Knight does not believe this is cause for concern since housing turnover tends to go down in January and February traditionally. Prepayments could pick up again throughout the spring so long as delinquency rates remain low or where they are.

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Choosing the right attorney can make the difference between whether or not you can keep your home. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resources:

https://www.blackknightinc.com/black-knights-first-look-at-january-2019-mortgage-data/

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Millennials Hold Over $1 Trillion in Debt

Posted on February 26, 2019by Admin

With the increase in student loan debt, it is hard to ignore the effects it is having on a particular generation. The most recent statistics reveal that “Millennials,” individuals who were born after 1982, hold more than $1 Trillion in debt – much of that being student loan debt. In fact, the amount has risen 130 percent since 2008. These figures come from the New York Federal Reserve Consumer Credit Panel and are the highest debt levels reported since before the 2007 recession.

Most students end their undergraduate careers with an average of $37,000 in student loan debt. If they choose to move onto graduate studies, that debt can reach six figures before the student is done. Following graduation, most of these students are struggling to meet basic living expenses on top of meeting their monthly student loan payments.

The student loan debt burden has also impacted millennials’ ability to purchase a home. Consumer debt is reported at a record high of $13.5 trillion. Mortgage debt constitutes most consumer debt nationwide, but that is not the case for the millennial generation. Since 2009, mortgage debt increased by only 3.2 percent while student loan debt jumped 102 percent.

Overall, student loans make up the second largest category of consumer debt. Credit cards and auto loans follow. At the end of 2018, car loans made up the third largest percentage of debt in the U.S., followed by credit card debt.

If a borrower is not able to maintain payments on his or her student loan debt, the damage that results to that person’s credit can be significant, and this hit to a credit score can seriously hurt the person’s chances of obtaining a mortgage down the road. This fact could be another reason why fewer millennials are taking out mortgages.

Student loan debt is different from other types of debt. It is currently estimated that somewhere around 40 percent of all student loan borrowers will default at some point on their student loans. Many different mistakes can be made when it comes to student loan repayment. If you believe you qualify for student loan debt relief, speak with an experienced bankruptcy attorney about your options.

Click here to read more on this story.

Related Resources:

https://www.badcredit.org/average-student-loan-debt/

Uncategorized

Common Mistakes People Make When Paying Down Debt

Posted on February 22, 2019by Admin

Credit card debt is one of the biggest problems facing those with serious financial challenges. While using a credit card responsibly can be a good way to establish credit, things can quickly get out of control when a person relies too heavily on credit cards and does not have the ability to pay off the balance every month. Paying down credit card debt can be a struggle, but many common mistakes people make when trying to pay down their debt can make that process even more difficult.

Not Addressing the Cause of the Debt

Credit card debt can add up quickly if you run into an unexpected situation, such as a job loss or medical crisis. Credit card debt can also accumulate quickly if you rely on your credit cards too much for every day, smaller expenses. If you spend more than you are making each month, and cover the overage with a credit card, these expenses can add up quickly. It pays to thoroughly review your financial situation and spending habits to see what is causing the debt and establish a spending budget that fits your income.

Adding to the Balance While Paying on the Card

If you truly want to pay down credit card debt, it is important to stop adding to the balance. Many times, people will think that they can pay off the debt while continuing to use the card. However, all this does is add new charges to an old balance that is already accruing monthly interest. No matter how disciplined you may be with paying off your new expenses every month, you may find yourself never truly making progress on the outstanding principal until you stop using the card completely. It is advisable to cut up the credit card (so you are never tempted to use it) and still pay off the debt each month. Do not call and close out the card. Depending on your total available credit, closing a credit card account with a high credit limit could hurt your credit score, particularly if you have high balances on other loans or credit cards.

Not Effectively Utilizing 0% Interest Balance Transfers

Many times, consumers will utilize promotional balance transfer offers to pay off debt by transferring credit card debt on a higher-interest card to a zero-interest card. However, if the person continues using the card and accruing a balance, he or she may never be able to successfully pay down the amount due before the promotional period ends. Once that period does end, the cardholder will be stuck with an even larger interest rate than he or she had previously.

Not Having a Plan

If you want to be successful in paying off your credit cards, you need to have a plan. One mistake many cardholders make is to make payments without any real plan when an unexpected windfall, such as a bonus or tax refund, is received. If you receive a large sum of money, it can be tempting to put all of that money towards a large balance, but it can also be helpful for the future to put that money towards a savings so that an emergency fund exists in the event it is ever needed.

It also helps to put together a plan that will actually work when paying off credit cards. If you have more than one, it helps to take one card, focus your effort on that card and then put the money that you are putting on the first card once it is paid in full to go to the next one and so on. This method is often known as the “snowball method,” and many debtors have had a great deal of success with this debt payoff plan. However, make sure to keep paying the minimum payment on the other cards while paying off the first one to avoid falling into default.

To reach more on this topic, please click here.