Did you take a vacation and end up with credit card debt?
Did you turn to your credit cards for holiday shopping?
Maybe you lost track of how much you were spending as you used your card for dinner, groceries, and other items over some time.
Or maybe you encountered a financial emergency (like the loss of a job or a medical emergency) and needed to use your credit cards to make payments and get by.
Whatever the reason, credit card debt can quickly rack up, leaving you tens of thousands of dollars in debt.
What can you do to get out of credit card debt? Filing for bankruptcy is an option.
Discharging Credit Card Debt
If you opt to file for bankruptcy, one of the first things your bankruptcy attorney will tell you is that your credit card debt will be treated as unsecured debt. This means it will likely be discharged.
When evaluating your debt, unsecured creditors – like credit card companies – are last in line to be paid, so debts are typically discharged.
If you file for Chapter 7 bankruptcy, a court-appointed trustee will evaluate your debt and determine how much your creditors will be paid back. The trustee will decide if you need to liquidate any assets to pay off any of your credit card debt. As an attorney, I will tell you that assets are rarely liquidated to pay off unsecured credit card debt. In Chapter 7 bankruptcies, the debt is usually discharged.
In a Chapter 13 bankruptcy case, you will submit a repayment plan to the court that will pay back your creditors over 3 to 5 years. How much of your monthly payment goes to each creditor is determined by the court’s trustee. As low-priority debt, credit card companies are usually at the end of the line. If you can afford to pay back more than your secured debts, some of your payments will go toward your credit card debt. At the end of your repayment plan, whatever remaining credit card debt is left will likely be discharged.
Credit card companies can challenge your bankruptcy discharge. To do so, they need to file a complaint with the court within 60 days of the first meeting of creditors. If this happens, your attorney will work with the creditors, or the court may determine if the debt can be discharged.
Credit Card Debt That Isn’t Discharged
While most credit card debt will be discharged through bankruptcy, there are some exceptions.
Any credit card debt due to fraud or misrepresentation will not be discharged. Common occurrences of this happen during the bankruptcy process. If you charge a bunch of expensive items right before filing for bankruptcy or take out large cash advances – assuming that the debt will be discharged – the court can rule that the debt is non-dischargeable.
You cannot take advantage of the system for charges you had no intention of paying back.
Should You File For Bankruptcy Due to Credit Card Debt?
If your only debts are credit card bills, then you should consult with a bankruptcy attorney to determine if filing for bankruptcy is the best option for you. Instead, your attorney might have other options to help you get out of debt.
Contact an Attorney
Do you need an Oklahoma City bankruptcy attorney to help you throughout your bankruptcy process and navigate your credit card debt? It’s crucial to hire an experienced attorney to help you determine what you can and cannot do and answer all of your questions so you know what to expect. Don’t let debt ruin your life. Call (405) 529-9377 for a free case review.