I have $25K in credit card debt. Should I file for bankruptcy?

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Q. I have $25,000 in credit card debt — I lost my job with COVID and struggled for a while — a $200,000 mortgage and $80,000 in student loans. I’m able to make the minimum payment on credit cards but I never get ahead, and the interest is killing me. At what point and how do I decide if I should file for bankruptcy?
— Debtor

A. We’re sorry to hear you’ve been having a rough time.

It’s hard to get by when you can only make minimum payments on credit accounts.

Filing for bankruptcy is never an easy decision. But it could be the best decision when you are in over your head in debt and need to find some financial relief, said Karra Kingston, a bankruptcy attorney in Union City.

She said while making the minimum payment on your credit cards is a good thing, it can be a never ending payment if you are not paying your debt off.

“If you continue to make monthly payments and are noticing the debt continues to go up and not down, it may be time to think about filing for bankruptcy,” she said.

Plus, if you aren’t putting any money away for rainy days, this could be a good indication that you may need to get on top of your debt, she said, noting that it’s important to have an emergency fund. If you can’t have an emergency fund, then as soon as an emergency happens, you could end up in an even worse financial position, she said.

Kingston said many bankruptcy lawyers in New Jersey provide free consultations.

“At the minimum, you should take advantage of this so that they can review your financial documents and determine if filing for bankruptcy is the right option for you,” she said. “Pre-bankruptcy planning is allowed and the sooner you speak to someone, the more clear a picture you will have about whether bankruptcy is a good option for you.”

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This story was originally published on March 14, 2022.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.