Filing for bankruptcy is an important step for people who are overwhelmed by debt. Credit card debt is often the culprit, and both Chapter 7 and Chapter 13 bankruptcies can help to rid your life of these burdens. However, do you know what happens if you are current on payments or if you have a card without an outstanding balance? Find out more about the intricacies of filing for bankruptcy and credit cards.
A Chapter 7 bankruptcy is a good option for discharging your debt when you only have problems with your credit cards. This type of bankruptcy was designed to quickly eliminate credit card debt. If you are also having a difficult time with car loans or mortgage debt, this might not be the best option for you.
Chapter 13 bankruptcies can address almost all varieties of debt. Car loans and home mortgages may be included along with credit card debt, but to file this type of bankruptcy, you'll need to have a regular source of income. Chapter 13 bankruptcies will combine and order your debts so that you will be allowed to make one monthly payment. The amount you pay will be based on income and expenses. Most of the time the amount that is paid back on credit cards is only a portion of what was originally owed.
When you file for a Chapter 7 bankruptcy, you will need to list all of your outstanding debts on a bankruptcy petition. Bankruptcy law requires that all debts are included and that no creditors are given preferential treatment, and the process is an all-or-nothing concept.
After your credit card company has learned of your bankruptcy filing, they will cancel your card because the potential discharge would wipe away any ongoing obligations that you have with the original credit card contract.
Once the case has closed and you are free of your debt, you can work to start rebuilding your credit. Most people are able to receive a new credit card offer within just a few months of their bankruptcy discharge.FREE CONSULTATION