Credit Card Debt : Bankruptcy versus Collections

It sounds as if these debts are causing some acute stress in your life. My advice to you would be to schedule a free consultation with a local bankruptcy attorney to learn your options. Additionally, going with a smaller firm or solo practitioner versus a large bankruptcy firm is better if you want personal attention. As an attorney who used to work for a large firm and now working for myself, I speak from experience; small firms depend a lot on client referrals versus advertising and will generally cater to you.

Good luck.

If you feel burdened and overwhelmed by your debt, bankruptcy may be an option for you but you should first consult with an attorney. If you file a Chapter 7 bankruptcy, it will stay on your credit report for 10 years. You stated that that's the same approximate time it would take you to maybe pay off your debt. The difference in repaying your debt or possibly filing for bankruptcy is summed up in two words..financial peace. If you file and qualify for bankruptcy a Chapter 7, you can have a "fresh start" by saving your money to repay your student loans and get yourself financially back on track. At the end of the 10 years, you would have reestablished your credit (there are many ways to do so) and put a substantial dent in your student loan balance. If you continued to struggle over the 10 years to repay your debt, you will continue to be in the same situation you are now. At times, bankruptcy is the most responsible move you can make. A few things for you to think about. But as I said, you should first however, speak with a bankruptcy attorney for advice and guidance.

The following information should not be taken as legal advice but simply as information based upon general principles of law, which is intended to educate. As such, this information is not intended, nor should it be construed as creating any attorney/client relationship. If you need specific legal advice, please consult with a lawyer of your choosing.

It is never a good idea to just ignore the situation and allow the credit cards to go into collection. If they sue you (which they will eventually do) and obtain a judgment against you, that judgment will remain with you for a long time and will attach to any property or assets that you may acquire in the future. It will also continue to grow over time from continuing interest. In a few years you will be out of school, have obtained a job and may be looking at purchasing a house. If there is a judgment on your record, it is unlikely that any lender would give you a mortgage unless the judgment is paid off at closing. In addition, more and more employers, especially at the job levels that I presume you would be looking for since you are in graduate school, are running credit reports on applicants as a part of the employment process.

With respect to your credit record, a Bankruptcy will remain on your credit record for a period of ten (10) years. If you choose to ignore the credit cards, or to make sporatic payments, they will remain on your credit report for a period of seven (7) years beginning on the date of the last payment. Thus, they could remain on your record for a considerable time.

This being said, Bankruptcy is a serious decision and should not be taken lightly. You should speak to a lawyer to discuss the various options that are available to you.