QuestionAugust 5, 2025

Gerald owes 4,500 on a credit card that charges 22% annual interest. What is the quickest and most reasonable action he can take to manage his debt? File for Chapter 11 bankruptcy Pay the minimum allowed monthly payment on time Increase the monthly payments to cut the time and interest Make payments using a different credit card with lower annual interest

Gerald owes 4,500 on a credit card that charges 22% annual interest. What is the quickest and most reasonable action he can take to manage his debt? File for Chapter 11 bankruptcy Pay the minimum allowed monthly payment on time Increase the monthly payments to cut the time and interest Make payments using a different credit card with lower annual interest
Gerald owes 4,500 on a credit card that charges 22%  annual interest. What is the quickest and most
reasonable action he can take to manage his debt?
File for Chapter 11 bankruptcy
Pay the minimum allowed monthly payment on time
Increase the monthly payments to cut the time and interest
Make payments using a different credit card with lower annual interest

Solution
4.6(147 votes)

Answer

Increase the monthly payments to cut the time and interest. Explanation 1. Evaluate Options Filing for Chapter 11 bankruptcy is not reasonable for a 4,500 debt due to its complexity and long-term impact on credit. Paying the minimum will prolong debt repayment and increase interest paid. Using another credit card with lower interest could be beneficial but depends on transfer fees and terms. 2. Determine Best Action Increasing monthly payments reduces both the time to pay off the debt and the total interest paid, making it the most effective strategy.

Explanation

1. Evaluate Options<br /> Filing for Chapter 11 bankruptcy is not reasonable for a $4,500 debt due to its complexity and long-term impact on credit. Paying the minimum will prolong debt repayment and increase interest paid. Using another credit card with lower interest could be beneficial but depends on transfer fees and terms.<br /><br />2. Determine Best Action<br /> Increasing monthly payments reduces both the time to pay off the debt and the total interest paid, making it the most effective strategy.
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