Personal Bankruptcy and Credit Card Debt
Personal bankruptcy is often an option for those who face credit card debt that is weighing them down. Bankruptcy is a way for those facing crushing debt to find relief, and to get a fresh start in their financial life. Credit card debt is, in turn, a frequent debt burden that individuals carry.
If you are facing credit card debt, and you'd like to learn more about personal bankruptcy, find help with a local bankruptcy attorney. A bankruptcy attorney may be able to answer your questions and offer support as you consider a major legal decision.
To talk to one of our sponsoring bankruptcy lawyers, please fill out the form below. You can arrange a free, no-obligation initial consultation with a bankruptcy lawyer near you.
Bankruptcy Options for Credit Card Debt
There are several types of personal bankruptcy, which have different benefits depending on the situation. For those with credit card debt and without a lot of income, the choice is often Chapter 7 bankruptcy. This option calls for sale of certain assets to pay off debts, but may offer a complete discharge in just a few months.
Chapter 13 bankruptcy calls for a reorganization, when filers pay off their debts over a period of three-to-five years in an affordable structure determined by a bankruptcy trustee.
Credit Card Debt in Chapter 7
When dealing with credit card debt and bankruptcy, one of the benefits of Chapter 7 bankruptcy is the automatic stay. This legal function and may halt foreclosure and can protect the bankruptcy filer from creditor harassment for unsecured debts. These debts, which aren't tied to physical property likes homes or cars, include credit card debt. In other words, credit card debt relief can quickly follow a Chapter 7 bankruptcy filing.
At the conclusion of a bankruptcy case, the bankruptcy court will typically discharge the filer's eligible debts. Chapter 7 may also call for a court auction of some of the filer's assets. However, many Chapter 7 filers do not own any valuable property that isn't also protected by state exemptions, and so are allowed to discharged their debts without a court sale.
Filers need to qualify for Chapter 7 bankruptcy by passing the means test, which compares the filer's income to average incomes in the state. If that income comes in below the median income, then they usually qualify. Those who don't qualify for Chapter 7 typically convert their cases to Chapter 13 bankruptcy.
Credit Card Debt in Chapter 13
The Chapter 13 bankruptcy process is different from that of Chapter 7. Rather than quickly wiping out debts, Chapter 13 creates an affordable debt repayment plan.
Chapter 13 does not involve a court auction, and as such most people who have a home, car or other valuable item that they might otherwise lose in a Chapter 7 filing chose Chapter 13 bankruptcy instead.
The automatic stay that halts creditors in Chapter 7 also applies to Chapter 13, and can be extended to stop foreclosure or repossession efforts as well. The automatic stay allows bankruptcy filers to concentrate on their case instead of their debts.
Talk to a Bankruptcy Attorney About Credit Card Debt
Concerned about credit card debt? You may be able to learn more about your options, including bankruptcy, from one of our sponsoring bankruptcy lawyers. Simply fill out the case review form below, and arrange your free initial consultation today.