Choose Chapter 13 over new credit cards to escape credit debt

Credit card companies are scrambling to make up for the millions of Americans who have defaulted on their credit card bills thanks to the recession. But the way they're going about it is a little sneaky.

Last week, my bank called twice to offer me a new low-APR platinum credit card. Yeah, like I'm going to open another account when I'm struggling to pay off the few I already have? I could barely conceal my laughter from the sales rep. Because while it's true companies are offering lower rates on some cards, like the one they tried to sell me, they're also hiking the rates of current customers--particularly anyone with large debts. Since laws next year will limit the tricks creditors can pull--such as sending out bills really close to the due date, suddenly lowering credit limits and sneaking in fees here and there--they want to pull those antics now, while they still can.

So what can you do about it? Be more vigilant than ever about reading the fine print on your credit card statements.

Most creditors reserve the right to change rates any time, for any reason. They can suddenly shorten your grace period or quietly raise your minimum payment and then sock you with a fee if you unwittingly write a check for the old amount.

And when you get offered that shiny new low-interest card? Try to turn it down. Because though that rate might look appealing now, it won't last long. They're trying to make money off of you, remember? I visited my bank's website and read the fine print about the card they had offered me--the low rate expires in a year, doesn't apply to cash advances and will more than triple if I make a late payment. Doesn't sound so nice now, does it?

And if creditors are sneaky when you sign up for their cards, they're absolutely relentless when you get behind on your payments. When you can't pay your bill, they'll call you at home, call you at work and otherwise make your life a living hell. That's why when you're caught in their cycle, Chapter 13 is often the smartest way out. By filing for bankruptcy, your debt payments can be lowered significantly (so can your mortgage payments, if a proposed bankruptcy bill is passed this year). As long as you keep up those payments, you will be protected from creditors. So will your house, as any foreclosure proceedings will be stopped.

Chapter 13 might seem like a complex process, but you don't have to be an expert to use it. Making it easy for you is our job. When you fill out our debt evaluation form, we'll schedule a free one-on-one meeting with one of our debt relief experts. We'll help determine what option best suits your needs, be it bankruptcy or just a tighter budget. Credit card companies might be playing a game with you, but that doesn't mean you can't beat them at their own game.

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