Thomas F. Miles, Attorney and Counselor at Law
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Overextended credit leads to need for debt reorganization

It is very easy to allow one's finances to get out of control. In fact, may in California do not even realize the full extent of their financial troubles until a pivotal point is reached, such as the denial of a new line of credit or the need to access a non-existent emergency fund. Many consumers find themselves with overextended credit, and have little idea how things got to that point. For many, the solution to this problem lies in debt reorganization.

Signs that an individual has reached the point of overextended credit include the lack of savings, or the need to regularly access savings in order to make ends meet. Another sign is when an individual passes the point beyond which he or she would be unable to pay off all unsecured debts within a year's time. Individuals who need to open new lines of credit to pay off older accounts are also showing signs of being overextended.

Some people who have reached this level of debt will seek Chapter 7 bankruptcy. For many, however, their level of income will not allow a Chapter 7 filing, leaving them with the option of Chapter 13 bankruptcy. Under Chapter 13, consumers are given the opportunity to restructure their existing debt, in order to make repayment an attainable goal. Certain debts can also be discharged through Chapter 13, once the repayment structure has been completed.

For those in California who are financially overextended, debt reorganization is worth consideration. Simply meeting the monthly minimum payments for various lines of credit is no way to get ahead, and will in fact make one's overall level of debt grow over time. When outstanding debt has surpassed a consumer's ability to pay, the time has come for a more proactive approach to the matter. For many, Chapter 13 bankruptcy offers a viable path back to financial solvency.

Source:, "Overextended credit and personal bankruptcy", Cathi Douglas, Jan. 2, 2015

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