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Bankruptcy and Credit Cards
Filing Bankruptcy on Credit Card Debt Credit Cards can become a life-saver in difficult financial times, but can also come back to haunt us. Many consumers have relied on credit cards to sustain themselves, but end up with $15,000, $40,000 or more in debt that becomes unbearable. Filing bankruptcy due to excessive credit card debt is not uncommon, and provides protection from the credit card companies. Chapter 7 will eliminate all unsecured debt, including credit card debt, without any fear of a lawsuit or other attempt to collect the debt. Chapter 13 on the other hand, will help consumers create a repayment plan at a much lower interest rate, and force the credit card companies to accept the proposed lowered payments. (Continued Below) Please take a moment to consider your debt relief options Bankruptcy Chapter 7: Discharges all debts completely, no monthly payments. Read More | Online Qualification Test | Comparison | Calculate Savings Debt Negotiation: Repay about 50% of debts*, dramatic monthly savings. Read More | Online Qualification Test | Comparison | Calculate Savings Bankruptcy Chapter 13: Repay about 85% of debts*, no monthly savings. Read More | Online Qualification Test | Comparison | Calculate Savings Credit Counseling: Repay 100% of debts, some monthly savings. Read More | Online Qualification Test | Comparison | Calculate Savings Both types of bankruptcy are suited for different people in different financial situations. You bankruptcy lawyer will advise you on the best option for your case, and ensure that you pay as little as possible while maintaining as much property and assets as possible. Bankruptcy is a tricky law with a lot of loopholes and rules, so make sure your attorney is experienced in handling consumer bankruptcy cases. How Bankruptcy May Eliminate Credit Card Debt Everything you owe credit card companies - because of purchases, fees, cash advances, interest - is considered unsecured debt. Medical bills, utility bills, payday loans and personal loans are also considered unsecured. On the other side, home mortgages and car loans are considered secured debt because the debt is directly tied to a piece of property. This is important when filing bankruptcy, because what type of debt you have will determine how it's handled in court. Unsecured debt is typically handled in one of two ways: Complete discharge In most bankruptcy cases, credit card debt will be completely discharged. Retired. Eliminated. Gone. Those debts will be cleared and credit card companies may not make further claims against the debt. They can't call you or send bills after you file. This most commonly happens during Chapter 7 bankruptcy. In almost every Chapter 7 bankruptcy case all unsecured debts, including credit cards and anything else, are discharged. Chapter 13 bankruptcy filings may also include complete retirement of all or certain unsecured debts. To see if this would apply to your case, speak with a local bankruptcy lawyer. Debt Reduction More common for Chapter 13 bankruptcy, if bankruptcy is unable to completely eliminate your credit card debt, it could drastically reduce what you owe. Then, once reduced, your credit card debt would be ordered and secured by a bankruptcy judge. This is important, because once your debt has been secured by your bankruptcy filing, it will be frozen. Your debt won't be subject to late fees or rate increases. Instead, you'll make one monthly to a court-appointed trustee who will handle all of your debts. This also puts a stop to phone calls and letters from collectors thanks to one very powerful tool. The Bankruptcy Automatic Stay There are other services, like debt settlement, that can help you get control of your debt. But only bankruptcy can offer the protection of the automatic stay. The automatic stay is a court order that puts a stop to all claims against you, your property and your debts from the moment you file bankruptcy until you are finished. This means that when you file, credit card companies and everyone else must stop calling, sending bills or taking other action, including lawsuits. So if you file a Chapter 13 bankruptcy and are paying off your debts over several years, you will be protected from calls and lawsuits during this time. If your debts are settled quickly through a Chapter 7, creditors will not be able to make claims against debt that was eliminated with bankruptcy. If someone tries to make claims while you're protected by the automatic stay, they would likely be in violation of the law and could be sued. Bankruptcy and Credit Cards: Information and helpful articles... Related Articles Common Questions: Frequently asked questions about bankruptcy and credit cards. Bankruptcy Credit Card Fraud: Signs & Red Flags: Which actions prior to filing a BK can trigger a fraud challenge? How to Eliminate Credit Card Debt With Out Bankruptcy: Talks about exactly how filing a BK can eliminate your credit card debt. Discharging Credit Card Debt in Bankruptcy: Discusses the process and details of discharging credit card debt in a BK Can I Keep a Credit Card if I File Bankruptcy?: Many people wonder if this is something they can do. Find out the answer! |
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