With economic uncertainty present, medical bills, and job loss or job reduction so common, many people cannot afford to pay their credit card bills or other unsecured debt. (Unsecured debt is debt that is not secured by an item such as a car, furniture, or a home).

When hard-working people miss 1 or 2 credit card payments, their credit card companies increase their interest rate to 12-18% and sometimes higher. If an unforeseen event occurs—such as a medical bill or job loss or loss of hours at work—it becomes nearly impossible for many people to pay their credit card bills if one of these events occurs.

There are 2 common options that people have: 1) debt consolidation or settlement and 2) bankruptcy.

Debt Consolidation: is when a company and/or a law firm stops the client from making payments to the credit card companies. Instead, the client puts those funds or available funds in an account so that those funds can be used to resolve the debt at a discounted rate through negotiations with the creditors. This method is successful for thousands of people; unfortunately, there are many people who do not succeed in this program.

Bankruptcy: is when the client seeks elimination of their unsecured debt through Chapter 7 protection. People who seek Chapter 7 protection must usually make nearly the amount or less than the amount of median family income in their state in order to qualify. People whose income is higher than the median family income may have to have Chapter 13 protection. Chapter 13 provides for a debt repayment plan to unsecured creditors from 3-5 years.