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Thursday, November 13th, 2008

by Theodore Sliwinski, Esq.

Credit Card Balance Transfers

In the world of bankruptcy I often see many of my clients play the game of transferring credit card balances time and time again. In most cases this type of nonsense is a certain sign that bankruptcy is a must and it is “around the corner.” As a New Jersey bankruptcy lawyer I have handled over one thousand bankruptcy cases. I have helped my clients wipe out more than $10 million dollars in credit card debt. I also might be able to help you!

A chapter 7 can wipe out all of your credit card debt. When a person files bankruptcy to wipe out credit card bills, it is not because credit cards are necessarily evil.  Instead, the person simply can’t handle the use of credit cards. Credit cards can be a vice just like alcohol, drugs, or porn is. If you over use any of these vices, then it can make your life miserable and out of control. Credit cards often feel like you are spending free money. You don’t have to reach into your wallet and feel the money being paid to another party. Credit card balance transfers can also create a financial disaster for you. Most credit card companies make it far too easy to transfer credit card balances. Credit cards can easily allow you to get into debt beyond your control when life’s problems come at you hard. A divorce, loss of a job, medical problems or illness, can all financially ruin you to the point where you turn to your credit cards to live on. You may have received credit card checks in the mail from the credit card company. Those checks which are tied to the credit cards can be used to pay for almost anything, and this also includes of course to pay for other credit cards. You can even write the checks for cash if you want to. It’s when you use credit card checks to pay the minimum on other credit cards, that’s a sign that  bankruptcy is a must.

The credit card companies encourage you to spend more now and pay later because as long as you make your minimum payment they will be making millions if not billions of dollars charging interest. However, if a person simply only makes the minimum payments he is basically just sinking further into debt. Credit card offers that entice you to make balance transfers from one credit card to another can sink many New Jersey-ites into massive debt that they never will escape. Credit cards get people into financial trouble because credit cards they are just too easy to use. By obtaining a cash advance on a credit card to pay another credit card, or by transferring a balance from a credit card to pay for another credit card, you are most likely heading for a financial disaster.

Many New Jersey-ites with money problems often will do stupid things. Borrowing from one credit card to pay another is one of them. If you really stop for a moment and think about the phrase “Borrowing from one Credit Card to Pay Another,” you are borrowing from a “Credit Card” and incurring “Debt” to pay another “Credit Card” which is incurring more “Debt.” Adding to your debt by incurring new debt to keep up the old debt will make it so you never catch up. In fact, all of you debt will eventually catch up with you and will collapse. It is no wonder that one of the most basic images of getting rid of debt is cutting up your credit cards.

If you are eligible for a chapter 7 then you can either wipe out your credit. If you are eligible for chapter 13 , then you can significantly reduce the amount of your credit card debt. If you have fallen on hard times, and if you are living paycheck to paycheck, or if you don’t receive a paycheck because you lost your job, then don’t add to the financial predicament by borrowing from one credit card to pay another. This tactic will most always make your debt problems get even worse. If you file for bankruptcy, then a credit card company could then file an adversary case. The credit card company may be able to make a case that you were insolvent when you started borrowing from one credit card to pay another. They could try to convince the bankruptcy court that you never intended on paying their credit card debt because you were broke when you incurred the debt.

The bottom line is that borrowing from one credit card to pay another is not a smart at all. Don’t allow credit card debts ruin your life! A chapter 7 can reduce or even totally wipe out your credit card debt, over the limit fees, high interest, and other and late fees. Many people believe that a chapter 7 is not available anymore because of the recent changes to the bankruptcy law. However, this is an urban legend. The bankruptcy business is booming and the courts are packed with debtors. Many people will still be able to qualify to file for a chapter 7. A chapter 13 allows you to reorganize your debt so you can pay it off over a longer period of time. It reduces or wipes out fines and late fees. A chapter 13 case makes your credit card debt much more manageable as you work to pay it off. Credit card debt is the major reason that causes many New Jersey-ites to file.  If you are borrowing from one credit card to pay another, then contact the New Jersey Bankruptcy Center. We can answer your questions about credit cards and bankruptcy, and help you decide if whether bankruptcy is right for you.