How Bankruptcy Can Eliminate Credit Card Debt

At the unfathomable figure of $1.142 trillion, credit card debt is surging in the United States. If you’re among the many Americans struggling to pay your credit card debt, then you know it’s a significant source of stress that can also take a toll on your mental health.

What you may not know is that filing for bankruptcy can eliminate credit card debt. Taking this action can stop lawsuits and collection agencies so you can get a fresh financial start. It’s not without its drawbacks though and should only be considered in the most dire circumstances.

Furthermore, filing for bankruptcy is complicated. If you’re going to succeed, you’ll need to enlist the services of skilled bankruptcy attorneys experienced in such proceedings to get the end result that you deserve.

Are You a Candidate for Filing for Bankruptcy?

If you have too much credit card debt and are unable to cover the minimum payment each month, this is the first sign that bankruptcy might be a good choice. In addition, if you’re finding it increasingly difficult to pay your rent and utilities, have more debt than you can pay, or your debt exceeds your assets, you are also in a solid position to consider filing for bankruptcy.

Another indication would be having all of your credit cards maxed out and an inability to acquire another card. In addition, if you’ve spoken to your creditors in an attempt to lower your monthly payment and they did not agree to it, chapter 7 bankruptcy could be the way to go.

You’re also a good candidate if you’re troubled by creditors frequently calling or writing to you. Not only is this stressful, but you run the risk of debt collectors suing you. If you fail to respond, the court could grant them a default judgment that can include legal fees and interest. If you don’t have that money, creditors have no problem garnishing your wages.

As mentioned above, filing for bankruptcy to eliminate credit card debt shouldn’t be taken lightly. By the time you make the decision, you’ve hopefully looked at other options like debt settlement and consulted with a reputable bankruptcy lawyer to determine all your options for repayment before you file. There are two types of Chapters your lawyer will suggest when working to lower or eliminate credit card debt. They are Chapter 7 and Chapter 13. 

How Chapter 7 Bankruptcy Can Eliminate Credit Card Debt

When you’re behind on your credit card payments, Chapter 7 bankruptcy allows you to eliminate your debt while keeping most of your assets.  It’s one of the most effective ways to get rid of credit card debt.

There are exceptions, however.

If you used your credit card to pay back taxes, student loans, alimony, or child support, these charges may not be discharged because they can be considered non-dischargeable debt. Furthermore, if you charged your credit card a minimum of $675 to purchase luxury items or services shortly before filing, these may not be discharged either.

What are luxury items or services? Think, jewelry, spa services, bar tabs; essentially anything you don’t need in order to survive.   

Chapter 13 Bankruptcy Is a Little Trickier

With Chapter 13 bankruptcy, you be required  to sell off any assets, but you will have to work within the parameters of a debt repayment plan and make more manageable monthly payments for three to five years.

In most cases, you won’t be required to repay all of your credit card debt. Once you’ve made payments for the required time period and aren’t delinquent on them, the rest of your debt is discharged.

Chapter 13 is typically a better option if you have a steady income you can rely on because if you miss those payments, your bankruptcy case could be dismissed and you’ll be back where you started.

File for Bankruptcy to Get Relief from Credit Card Debt

Now that you understand how filing for bankruptcy can eliminate credit card debt, it’s time to get expert advice from a skilled attorney who will determine whether a Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for you.

You want lawyers who regularly work with bankruptcy trustees because they know how creditors will approach your case and use that information to protect all your assets.

We are those lawyers. So contact us today to arrange a free consultation to speak with us. And get out from under that suffocating debt.