A medical student who is a popular blogger has revealed how she has paid off large amounts of student loan debts. It involves paying them off through regular payments of funds obtained through very low interest rate credit cards. The ability to do that applies in Arkansas and elsewhere, but can one later file bankruptcy to discharge the credit card debt that may accrue in times of an unexpected emergency?
First, one cannot get that kind of preferred interest rate on credit cards without a stellar credit record. A person, however, may sustain an unexpected change in circumstances that makes it difficult to pay off the credit cards. In that event, it may be possible to file bankruptcy to eliminate the credit card debt.
However, it could be a risky proposition due to the potential for misinterpretation of the individual's intentions. As long as the inability to keep paying on the card balances is due to a totally unexpected financial crisis, the discharge of such debt in bankruptcy should be feasible and ethical. In a personal consumer bankruptcy, the trustee may approve the foregoing practice, especially where there is nothing prominent that signals some kind of wrongdoing.
However, even if the trustee sees no red flags, one or more credit card companies may see a question of bad faith. They would have a right to come in and contest the questionable use of credit by the bankruptcy petitioner. Such a contested matter arises only very rarely in a consumer bankruptcy.
Most people run up credit card debt quite innocently and with every intention of paying the debt back. Where the record of payments on a credit card shows that the individual was indeed a stalwart customer over the years, that is very likely to be sufficient verification of good faith. In any event, Arkansas residents will be best protected by determining their qualifications for bankruptcy relief by consulting first with an experienced consumer bankruptcy attorney.
Source: hcplive.com, "My Debt is Better Than Hers: 5 Reasons Credit Card Debt Trumps Student Loans", Dr. Wise Money, Sept. 15, 2016