Discharging Credit Card and Charge Card Balances
It is so easy to incur a mountain of credit card debt. Merchants, restaurants and even government agencies accept credit cards. Many retailers offer their own charge cards or branded Visa cards to encourage customers to spend more. In these tough economic times, more and more people are making ends meet by purchasing basic necessities such as groceries and gas on credit.
Filing for bankruptcy will either eliminate credit card balances or allow you to repay the debt over several years. Our Minnesota debt relief lawyers have helped thousands of clients end the creditor harassment and get a fresh start.
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Eliminating Credit Card Debt Through Bankruptcy
At Hoglund, Chwialkowski & Mrozik, PLLC, we know that most people with high credit card balances are not “living large” in an abusive lifestyle and spending irresponsibly. We know that credit card debt is often a symptom of other hardships, such as a job layoff or reduced hours, a costly health crisis or the loss of a spouse’s income due to injury, death or divorce. Whatever caused your financial hardship, our attorneys are here to help.
Chapter 7 bankruptcy eliminates unsecured debt, which means the debt is not tied to collateral that a creditor could repossess. (See What Debts Can I Discharge?) Credit card debt is typically unsecured debt. Sometimes store charge cards are structured as secured debt, but retailers almost never pursue recovery of the goods for which a discharge is sought. In other words, you will most likely not have to give back anything you bought on a credit card.
Chapter 13 bankruptcy allows you to pay off debts over time, based on your disposable income. At the end of your Chapter 13 plan, remaining unsecured debts are discharged. In the end, our clients commonly pay only 40 to 50 percent of total credit card debt.
Common Questions About Credit Cards and Bankruptcy
- Does it matter what I bought with my credit card? Generally speaking, credit card purchases can be discharged in a bankruptcy. Creditors typically only challenge purchases made on credit cards in limited circumstances. An open and honest discussion of the entire situation with your attorney is the best way to obtain specific information that will apply to you.
- Should I keep paying my credit cards while my bankruptcy is pending? No. There is nothing to gain by paying on a debt you plan to discharge. Once you file for bankruptcy, the credit card companies cannot pursue legal action or charge additional fees or interest for non-payment.
- Can I make credit card purchases if I plan to file bankruptcy? No. Recent purchases for necessities may be discharged, but rapid run-up, major purchases or cash advances in the 60 days prior to filing may not be discharged.
- Can I put some credit cards in the bankruptcy and keep others? No. All creditors that are owed money must be listed as creditors.
- What if I have a card with a balance of zero? You do not have to list a credit card if you owe nothing on it. However, the credit card company may cancel your account once you file for bankruptcy.
- Can I ever get a credit card again after bankruptcy? Yes. You probably will receive credit card offers in the mail as soon as a month or two after filing for bankruptcy. Ironically, you will be a better credit risk than someone who is carrying a huge credit card balance. Also, since you cannot file Chapter 7 bankruptcy again for eight years, the credit card companies will have less to risk. Getting a credit card and paying it off on time is a good way to re-establish good credit. You need to be careful about choosing a new card, and careful about how much you use it.
Call Us Now · 800-850-7867 or 651-202-2203
The Hoglund Promise · What Our Clients Say
At Hoglund, Chwialkowski & Mrozik, we take pride and pleasure in helping ordinary people escape from crushing debt. Our Minnesota bankruptcy and credit card debt lawyers can help you rest easy and get your finances back on track. Contact us today for a free consultation.