Any bankruptcy lawyer will tell you that you can get rid of credit card debt. Chapter 7 bankruptcy, for example, helps you “discharge” different types of unsecured debt – “unsecured” meaning not secured with collateral – including credit card balances and medical bills.
Secured debts, like auto loans, are not the same as credit card debt, in that a lender has options – in the form of repossessing the car – in case you stop making payments on the loan.
But as Ann Carrns writes for Bucks, a New York Times blog, some companies are luring consumers with zero-interest balance transfer offers. You then take your auto loan and turn it into credit card debt. The caveat is you must pay off the debt within a specified period of time, at which point interest rates will skyrocket.
Theoretically, if you later find yourself overwhelmed by debt, you could file for bankruptcy and discharge your credit card debt – including that which used to be your secured auto loan – and keep your car at the same time. Otherwise, the typical Chapter 7 bankruptcy would require you to continue making payments if you wanted to keep your car.
At Ledford & Wu, we help consumers file for bankruptcy and find other means of debt relief. To learn more about discharging credit card debt and a lot of other helpful info about bankruptcy, please visit our Chicago Chapter 7 bankruptcy page.
Car Loans and Zero-Interest Balance Transfers