I’m a debt consolidation lawyer and every day I deal with plastic. For most of the twenty-five years I’ve been offering Indiana bankruptcy help, people have tended to show up at the Zuckerberg bankruptcy law offices with plastic debt in three flavors. Today, it’s common for clients to visit us with debts in four or five different plastic card categories.
Unsecured credit cards – no deposit of cash required, no collateral for the loans taken out when using the card. For most who file personal bankruptcy in Indiana, a big part of their problem lies in this type of unsecured debt.
High risk credit cards – these high-fee, high penalty cards tend to be offered to people with poor credit histories or low-paying (or no) jobs. Sometimes clients who have been out of work for awhile will find themselves unable to cope with the rising amounts they owe on this type of card, and end up seeking Indiana bankruptcy services.
Secured credit cards – money is put into the card account and the credit available is limited to that amount. Like high risk cards, secured credit cards can carry very high charges. One of the Columbus bankruptcy lawyers who works with me says she sees this kind of card a lot when people have already filed bankruptcy Chapter 7 in Indiana once before and are filing for the second time.
Debit cards – these are another version of secured credit cards, but are usually linked to a checking or savings account at a bank. Many of these cards are “reloadable”. In fact, as a lawyer for bankruptcy, I couldn’t help but take notice of the statistic I read – U.S. consumers are expected to “load” $82 billion onto reloadable prepaid cards this year alone!
The Credit Info Center points out one advantage of prepaid and secured credit and debit cards that all good bankruptcy attorneys in Indiana know: they can help rebuild your credit. “If your credit history and/or credit score are suffering, getting an unsecured credit card or loan may be near impossible.”
There’s also some good news in the works that I’ll share with Bankruptcy in Indiana readers: the Consumer Financial Protection Bureau is introducing legislation that will limit the fees that can be charged to consumers. As of now, while there is legislation governing credit cards, prepaid debit cards have not had any restrictions.
So what happens with the different kinds of cards when you file personal bankruptcy in Indiana or even small business bankruptcy in Indiana? Unsecured and high risk credit cards are listed as debts you owe. Money you’ve loaded onto a prepaid credit or debit cards will be listed under assets. One of the most important bankruptcy services I perform is helping clients fill out the paperwork that is submitted to the bankruptcy court. Plastic almost always takes up space on that paperwork, I can tell you!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg