Can you get rid of credit card debt with bankruptcy?
On Behalf of O’Brien Law Firm, LLC
Posted on: October 22, 2021
If you have been struggling to pay for everyday items recently, it may not surprise you that prices have increased. In fact, the U.S. Bureau of Labor Statistics consumer price index shows a 5.4% jump in prices in the last year alone. This may leave you with little choice but to reach for your credit cards to make ends meet.
Credit card debt can sneak up on you quickly. If you have excessive debt or can only make the minimum payments on your cards, you may be looking for debt-relief options. Fortunately, with both Chapter 7 and Chapter 13 bankruptcy filings, you can probably discharge most or all of your credit card debt.
Chapter 7 bankruptcy
With Chapter 7 bankruptcy, you disclose all your assets and debts to the bankruptcy trustee. The trustee may then sell some of your assets to pay your creditors. There are many exemptions, though, so you are not likely to lose everything. Then, you no longer have to pay debts that qualify for discharge. Unsecured debts, like credit card balances, unusually fall into this category.
Chapter 13 bankruptcy
Chapter 13 bankruptcy works differently than Chapter 7 bankruptcy, as you and the bankruptcy trustee come up with a repayment plan for your outstanding debts. At the end of your repayment period, which may be three or five years, your remaining credit card debt is typically dischargeable. That is, once you complete your repayment plan, your qualifying credit card debt goes away.
There are many factors that influence whether your debt is dischargeable during bankruptcy. Ultimately, so nothing catches you by surprise, it is critical to explore all your legal and financial options before filing for either Chapter 7 or Chapter 13 bankruptcy protection.