Can Bankruptcy Wipe Out Your Credit Card Debt?

Bankruptcy lawyer in Salt Lake City

If you’re drowning in credit card debt, filing for bankruptcy may be a good way to get your head above water. In fact, many people choose to file for this very reason.

Before you make plans regarding your financial future, you should consult with an experienced bankruptcy attorney at a local debt relief agency. After all, a different approach — like working with a credit counselor or negotiating with your creditors — could be your best course of action.

But, if you just want to know what happens to credit card debt in Chapter 7 and Chapter 13 bankruptcy, you’ll find the answer below.

If You File for Chapter 7 Bankruptcy…

With this type of bankruptcy filing, most or all your unsecured, non-priority debt – or debt that isn’t guaranteed by collateral or designated as a priority obligation — disappears at discharge. As credit cards typically fall into this category, Chapter 7 bankruptcy can effectively wipe away your liability for any unpaid balances.

If You File for Chapter 13 Bankruptcy…

With a Chapter 13 bankruptcy filing, you’ll agree to a three- to five-year repayment plan. The payments will be distributed amongst your creditors, and while the plan will pay some debts in total, credit cards and other unsecured debts may still have balances at the end of the repayment period. But, this is usually of no concern, as discharge eliminates the obligation to pay the rest of the money owed.

Credit Card Companies Can Object to Debt Discharge

Creditors are able to challenge the discharge of a debt, and if their motion is successful, you’ll be legally required to pay them back. As a general rule, this is more likely if any of the following apply to your situation:

  • You greatly exaggerated your income or made another deceitful statement on your credit card application, and the false information was material to your approval for the card
  • You purchased luxury goods or services, charging over $725 within the 90 days before filing for Chapter 7 or Chapter 13 bankruptcy
  • You took out a cash advance of more than $1,000 within the 70 days prior to submitting your bankruptcy claim to the court

You may be able to dispute these allegations, but doing so is a complicated process. For the best chance at the judge ruling in your favor, you’ll need assistance from a local bankruptcy attorney.

Get Expert Advice From a Local Debt Relief Agency

Are you overwhelmed with credit card debt? If you live in northern Utah, the experienced bankruptcy attorneys at the Law Office of Davis & Jones, P.C., can assist you in exploring your options for securing a brighter financial future.

As a federally designated debt relief agency, we have the expertise to help you determine if filing for bankruptcy is in your best interests and, if so, whether a Chapter 7 or Chapter 13 claim is the right choice. For more information on the Law Office of Davis & Jones, or to schedule a free bankruptcy attorney consultation to discuss solutions to your credit card debt, contact our Salt Lake City, Utah, office today.