Can You Declare Bankruptcy On Credit Card Debt?

Are you struggling with credit card debt? Are you considering declaring bankruptcy as a way out? You’re not alone. Many people are facing similar financial challenges and are seeking answers. In this article, we’ll explore whether bankruptcy is a viable…

Are you struggling with credit card debt? Are you considering declaring bankruptcy as a way out? You’re not alone. Many people are facing similar financial challenges and are seeking answers. In this article, we’ll explore whether bankruptcy is a viable option for credit card debt and what you need to know before making a decision.

Can You Declare Bankruptcy on Credit Card Debt?

Can You Declare Bankruptcy on Credit Card Debt?

If you are struggling with credit card debt, you may be wondering if bankruptcy is an option for you. Bankruptcy is a legal process that can help you eliminate or restructure your debt, but it’s not always the best solution. In this article, we’ll explore whether you can declare bankruptcy on credit card debt and discuss the pros and cons of this approach.

What is Bankruptcy?

Bankruptcy is a legal process that allows individuals or businesses to eliminate or restructure their debt. There are two main types of bankruptcy for individuals: Chapter 7 and Chapter 13.

Chapter 7 bankruptcy is also called “liquidation” bankruptcy, as it involves selling off your assets to pay off your creditors. In exchange for giving up your assets, you can have most or all of your unsecured debt (like credit card debt) eliminated. However, not everyone is eligible for Chapter 7 bankruptcy, and it can have a significant impact on your credit score.

Chapter 13 bankruptcy is also called “reorganization” bankruptcy, as it involves creating a repayment plan to pay off your debts over a period of three to five years. This type of bankruptcy allows you to keep your assets, but you must have a steady income to qualify.

Can You Declare Bankruptcy on Credit Card Debt?

Yes, you can declare bankruptcy on credit card debt. Credit card debt is considered unsecured debt, which means that it’s not tied to any collateral (like your house or car). This makes it eligible for discharge in bankruptcy.

However, it’s important to note that not all debts can be discharged in bankruptcy. For example, student loans and most tax debts cannot be eliminated in bankruptcy. Additionally, if you have recently made large purchases or cash advances on your credit card, those debts may not be dischargeable in bankruptcy.

Pros of Declaring Bankruptcy on Credit Card Debt

There are several potential benefits to declaring bankruptcy on credit card debt, including:

  • Eliminating most or all of your unsecured debt, including credit card debt
  • Stopping collection calls and other forms of creditor harassment
  • Protecting your assets (if you file for Chapter 13 bankruptcy)
  • Getting a fresh start financially

Cons of Declaring Bankruptcy on Credit Card Debt

Declaring bankruptcy on credit card debt is not without its downsides. Some potential drawbacks include:

  • Impact on your credit score (bankruptcy can stay on your credit report for up to ten years)
  • Possible loss of assets (if you file for Chapter 7 bankruptcy)
  • Difficulty obtaining credit in the future
  • Costs associated with filing for bankruptcy

Alternatives to Bankruptcy

Bankruptcy is not always the best solution for credit card debt. Some alternatives to consider include:

  • Credit counseling or debt management programs
  • Debt consolidation loans
  • Negotiating with your creditors for a lower interest rate or payment plan
  • Selling assets to pay off your debt

Conclusion

Declaring bankruptcy on credit card debt is a serious decision that should be made after careful consideration of all your options. While bankruptcy can help you eliminate or restructure your debt, it can also have significant consequences. If you’re struggling with credit card debt, it’s important to seek help and advice from a qualified professional.

Frequently Asked Questions

What is bankruptcy?

Bankruptcy is a legal process that helps individuals and businesses that are unable to repay their debts. It offers a fresh start by eliminating or reducing your debts, while also providing protection from creditors.

Bankruptcy can be a useful tool for those struggling with overwhelming debt, but it should only be considered as a last resort after exploring all other options.

What types of bankruptcy are available to individuals?

There are two types of bankruptcy available to individuals: Chapter 7 and Chapter 13.

Chapter 7 bankruptcy is often referred to as “liquidation” bankruptcy and involves the sale of non-exempt assets to pay off creditors. This type of bankruptcy is best for individuals with little to no income and few assets.

Chapter 13 bankruptcy, on the other hand, involves a repayment plan over a period of three to five years. This type of bankruptcy is best for individuals with a steady income and the ability to repay their debts over time.

Can credit card debt be discharged in bankruptcy?

Yes, credit card debt can be discharged in bankruptcy. However, there are certain requirements that must be met in order for credit card debt to be discharged.

First, the credit card debt must be unsecured, meaning it is not backed by collateral. Second, the debtor must not have committed fraud or engaged in any other illegal activity related to the debt. Finally, the debtor must meet all other requirements for bankruptcy.

What happens to my credit score if I declare bankruptcy on credit card debt?

Declaring bankruptcy will have a significant negative impact on your credit score. It will remain on your credit report for up to 10 years and can make it difficult to obtain credit in the future.

However, it is important to remember that if you are struggling with overwhelming debt, your credit score is likely already suffering. Bankruptcy can actually provide a path to a fresh start and the opportunity to rebuild your credit over time.

Should I hire an attorney to help me declare bankruptcy on credit card debt?

It is highly recommended that you hire an experienced bankruptcy attorney to help you navigate the bankruptcy process. Bankruptcy is a complex legal process, and an attorney can help ensure that your rights are protected and that you receive the best possible outcome.

An attorney can also help you determine whether bankruptcy is the right solution for your financial situation and can assist you in determining which type of bankruptcy is best for you.

I’m $80,000 in Credit Card Debt! File for Bankruptcy?


In conclusion, declaring bankruptcy on credit card debt is possible, but it should be considered as a last resort. It is important to explore all other options, such as debt consolidation or negotiating with creditors, before filing for bankruptcy.

Bankruptcy can have long-lasting effects on your credit score and financial future, so it is crucial to understand the implications before making a decision. Seeking the advice of a financial advisor or credit counselor can help you determine the best course of action for your specific situation.

Ultimately, taking steps to manage your debt and improve your financial literacy can help you avoid the need for bankruptcy in the future. Remember, it is never too late to take control of your finances and work towards a better financial future.

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