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Illinois bankruptcy: credit card traps may be difficult to avoid

Illinois consumers know that credit cards can be helpful by offering rewards and special interest rates to facilitate a variety of much needed purchases, but they can also become a trap if the consumer is not wise to a creditor's tricks. In today's economy, more and more people have to use credit cards just to live. Under certain economic difficulties and circumstances, the option to file for bankruptcy may be a viable option for individuals who find they are struggling to pay down credit card debt.

Under ordinary circumstances, more Illinois consumers would be able to avoid credit card traps such as cash advance checks with high fees, ATM transactions, and making purchases on a credit card once designated for balance transfers. However, through no fault of their own, these credit card traps may have become difficult to avoid. The tough economy has left many otherwise credit conscientious people struggling to make minimum payments or wind up being over 60 days behind on their payments.

In response, the credit card companies are raising the interest rates on cards belonging to people who are already unable to pay their bills. To make things worse, consumers who are truly unable to pay then become subjected to collection efforts that can sometimes border on harassment. The stress of an already bad financial situation becoming worse can even begin to affect the physical health of a consumer.

A viable next step for consumers who find themselves trapped under a mountain of debt may be to file bankruptcy. The U.S. Bankruptcy Code and the applicable Illinois laws provide protections for consumers who are being harassed by creditors. The two main types of bankruptcy filed by consumers are Chapter 7, total liquidation, and Chapter 13, a reorganization of debt. Both options provide the protection of the bankruptcy court and help consumers deal with their creditors--whether through a complete discharge of debts or a repayment plan that may include only a portion of the original debt.

Source: NBC KNDO 25, "7 credit card pitfalls to avoid," Andrew Housser, Aug. 31, 2012

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