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What steps should I take if I currently have good credit but have a ton of credit card debt and struggling to make the payments

Allentown, PA |

I am self employed but barely able to make the minimum payments. Every month is a challenge.

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Attorney answers 7


Talk to an experienced bankruptcy lawyer in your area. You may be surprised to learn that filing for bankruptcy protection may not have such a negative impact on your credit than you may think. Most of my clients' credit scores improve as a result of filing due to an improvement in their debt to income ratios.

Legal disclaimer: The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the Commonwealth of Pennsylvania.


Sounds like you could be a good candidate for chapter 7 bankruptcy. Go schedule a consultation with a bankruptcy attorney in your community. Most of my clients share the same sentiment after successfully completing their cases......"I wish I had done that sooner!"
Best of luck.


Meet with a local bankruptcy attorney. Good luck.

Be sure to designate "best answer." If you live in Oregon, you may call me for more detailed advice, 503-650-9662. Please be aware that each answer on this website is based upon the facts, or lack thereof, provided in the question. To be sure you get complete and comprehensive answers, based upon the totality of your situation, contact a local attorney who specializes in the area of law that involves your legal problem. Diane L. Gruber has been practicing law in Oregon for 26 years, specializing in family law, bankruptcy, estate planning and probate. Note: Diane L. Gruber does not represent you until a written fee agreement has been signed by you and Diane L. Gruber, and the fee listed in the agreement has been paid.


Your credit may be good at the moment, but if you are struggling to make the minimum payments you may be better off getting a fresh start through a Chapter 7 Bankruptcy. Former clients in similar situations have been able to rebuild their credit in about 2 years following bankruptcy, which is a lot more feasible than trying to pay down large debts at high interest rates.
Contact a local Bankruptcy Attorney to evaluate your situation.


I agree with Christian. If you are able to make only minimum payments, you should discuss your options with a bankruptcy attorney. Whether bankruptcy is the right solution for you depends upon your overall financial situation, including your income, the value of your assets, and the type and amount of your debts. If bankruptcy is not the right solution, debt negotiation may be an option.

Note that many assets, including pensions/401k plans and the equity in your home (up to a certain amount) are exempt in bankruptcy. Therefore, you should not liquidate assets to pay for unsecured debt without consulting with a bankruptcy attorney first.

To reach me call 215-248-0989. Harborstone Law Group serves Philadelphia, Montgomery, Delaware, and Bucks Counties in Pennsylvania. Answers to any question on this forum are for general information purposes only and do not constitute legal advice or establish an attorney-client relationship between Harborstone Law Group or its attorneys and you. This type of forum cannot substitute for a consultation with an attorney.


Here is a preprint of what I think your credit report really is. You think it's good, but in reality, it goes up until you're over leveraged then it comes down.

Credit Cards
Your Credit Rating
Most people are surprised to learn that filing for bankruptcy can increase their credit rating. What follows is an example of why filing for bankruptcy can increase your credit rating.

Suppose you are a credit card company considering two people to give a credit to and suppose that these two individuals have jobs with approximately $250 in disposable income that you can garnish.

The first person has never filed for bankruptcy and has $75,000.00 in debt.

The second person has $0.00 in debt but he has recently filed for bankruptcy and cannot get a Chapter 7 discharge for at least the next 8 years.

The first person
The first person is a huge credit risk because, first, he can’t afford the debt that he already has, and second, the chances of him filing for bankruptcy, if he goes under more debt is exponentially increasing because there is only so much more he can handle before it’s painfully obvious that he won’t ever be able to pay that debt back.

If you try to garnish his wages, he will file for bankruptcy because there would be nothing for him to be holding onto.

The Second Person
The second person is much less of a credit risk. First, his disposable income can probably cover the credit cards you allow him to have. Second, he cannot escape liability by filing for bankruptcy because he has recently filed for it. Should you forward credit to him, he will be on the hook for at least the next seven years. This gives the credit card company a lot of time to garnish wages and recover their money because the fear of the second person filing for bankruptcy is no longer there.

The FICO credit rating takes this into account. By filing for bankruptcy and decreasing the risk you pose, your credit score should go up.

A Second Perspective
For every dollar you spend on your credit card, your credit card company charges the merchant a transaction fee in the approximate amount of 3.000%.

My Dad used to tell me that credit card companies lose so much money because of him. He would spend thousands of dollars every month on his credit card and pay it all off in full at the end of the month. This way, he was never charged interest for his cards, but he gained the convenience of being able to use the cards,... or so he thought.

If my Dad spends $1,000.00 every month on his credit card, and pays it off in full. The credit card company makes its money back, because my Dad returns the $1,000.00 and it gets 3% from the merchant ($30.00 per $1,000.00). If we annualize this profit, the net result is the credit card company is making approximately 36% off of my Dad’s purchases on an annual basis.


That’s how they make their money, that’s why they give people who recently filed for bankruptcy credit cards. They make their money, and they are protected for eight years. They get their pie and they eat it too.

That’s why you shouldn’t feel bad about filing for bankruptcy. The credit card companies have received more than their fair share. For them, if you have run out of credit and can’t pay, they can’t make any more money off of you, so why not do them a favor and get a fresh start?

The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here. Please visit my web site: for more information about my services.


As some of my colleagues have pointed out, barely making your minimum payments each month does not necessarily mean you have good credit. Many people think that just because they make minimum payment son time that they have good credit. Often this is far from true.

Paying is good, but paying only minimums is negative. Also, depending on how much of your available credit you use this ration may also be very negative. Just because you pay or even if your score is fairly decent it does not mean you can get a loan for what you may want or need.

Visit an Allentown bankruptcy attorney to discuss your situation. Bankruptcy may be best for you but nobody can know that based upon your fact pattern disclosed in your question. There are many other options for dealing with debt as well. You must be very careful because borrowing money is hard enough already if you are self employed and one wrong move could put you in a worse situation than you are now.

Almost every Allentown bankruptcy attorney, including myself, offers a completely free consultation. Go discuss your whole situation with someone ASAP so at least you know options regardless of what you decide to do!