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Chapter 13 bankruptcy is one option to deal with credit card debt

Arizona residents who are about to embark on their next shopping trip with credit card in hand may not be aware of the Christian Science Monitor report that the average household in the country carries credit card debt of about $14,500.

Some households owe even more in credit card debt than the reported figure, forced to use credit cards for necessary expenses, and they struggle to make their payments on time. Some people even have trouble making payments despite a steady income and filing for bankruptcy may be their best option.

Chapter 13 bankruptcy is generally the best solution for people with an income and with certain assets they would like to keep. Chapter 13 allows filers to retain possession of their property, including car and house.

Filing for Chapter 13 bankruptcy will also put an end to harassment from any debt collection agencies as well as wage garnishment.

As filers of Chapter 13 bankruptcy have an income, the court uses their future income to approve a payment plan the filer would follow for the next several years. Remaining debts are typically discharged at the end of the payment plan period if all payments are made.

Chapter 7 bankruptcy differs from Chapter 13 in that many assets are liquidated in order to pay off debts. As in Chapter 13 proceedings, personal property can also be retained in Chapter 7, such as cars and furniture, but conditions and details depend on state law and circumstances.

Arizona residents should not feel ashamed when considering filing for bankruptcy in the face of overwhelming bills. Bankruptcy allows many Arizona residents to leave debt behind and build financial security again.

Source: SFGate, "Worst Case Scenarios for Credit Card Debt," Chris Neiger, June 22, 2012