In many cases, credit card debt can become extremely inconvenient and difficult to pay. In general, people do not consider the possibility of accumulating so much debt on their cards that it becomes unpayable. On the contrary, it is always believed that the financial situation will improve over the months. However, when interest rates rise and there is not enough money to pay off the debt, it can begin to increase at an ever faster rate. In those cases, many people may consider filing for bankruptcy. But, if it is the case, it is not entirely known if you can declare bankruptcy on credit cards or not. To shed light on this matter, be sure to read this blog post.
Running up significant credit card debt can create a number of problems for your financial situation. Beyond that, there is an inconvenience that can become a headache for your daily life. It is about the notices and calls from the creditors that harass them daily. It is normal that, in the absence of payment, a series of daily inconveniences begin on the part of the creditors. Many times they adopt this position as a pressure tool, because they believe that you do not want to pay your debt. However, your financial situation may not allow you to meet the obligations at this time. In those cases, bankruptcy can be presented as a good alternative to alleviate your situation in the short term.
The answer on whether you can file bankruptcy on credit cards
In addressing this issue, it is important to differentiate between two different situations. On the one hand, if it is possible to declare bankruptcy for a particular debt, leaving aside any other obligation. On the other, if the credit card debt is likely to be included within the bankruptcy conditions. Regarding the first point, it is worth clarifying that you cannot choose which debts fall within the bankruptcy structure, beyond the conditions established by the law itself in its exceptions. Therefore, it is not possible to file bankruptcy for just credit card debt and leave out all other obligations.
In the second question of whether you can declare bankruptcy on credit cards, we can say that it is possible to include debt of this type in bankruptcy. Therefore, if a situation arises in which it is not possible to cancel the card, the bankruptcy declaration will include this debt and it may be restructured under the conditions established by law. To know these conditions, it is necessary to differentiate between the two types of bankruptcy that can be chosen. Chapter 7 or Chapter 13 bankruptcy options have different features and will allow you to rebuild your financial situation with different options and different requirements.
Can you file for chapter 7 credit card bankruptcy?
The Chapter 7 bankruptcy option is especially recommended for those seeking to forgive or liquidate an important part of the accumulated debt, be it by credit card or of another type. Fortunately, credit card debt is one of the easiest to include in a discharge. That’s because credit cards are considered unsecured debt, meaning they’re not backed by physical assets, like mortgages or car loans. Ultimately, much or even all of your credit card debt is likely to be discharged during the bankruptcy process.
When you can file for chapter 7 credit card bankruptcy, an escrow agent will liquidate assets to pay off obligations. However, credit card debt is at the bottom of the list, so it will be one of the last to be addressed within the debts incurred. This means that, in most cases, the credit card debt is not paid, or it is done partially.
In order to apply for chapter 7 for a credit card debt, it must be demonstrated that the personal income is below the average for the area of residence. Another option that will allow you to qualify is if, even earning above the average, you can show that it is not enough to meet the obligations of the card. This is known as the means test, and it is a valid resource when filing for bankruptcy. The way to prove it is through documentation that proves your monthly income and expenses.
Can you file for chapter 13 credit card bankruptcy?
The other feasible option through which you can declare credit card bankruptcy is by using chapter 13. This type of bankruptcy offers the possibility of preserving assets, while debts are restructured or canceled, depending on the conditions apply. of the case. The form of debt restructuring used in chapter 13 is through affordable monthly payments (that is, within what your income allows) over a period of 3 to 5 years.
Within the restructuring plan, the amount of credit card debt that you will end up paying off will depend on several factors. Mainly, it is about two issues. The first is the disposable income of the accountant during the period. The higher this is, the more the amount of card debt you will have to pay. Second, any non-exempt property you own will also be considered. According to the value of these, the amount of the credit card debt to be paid will also be modified. In short, at the end of the payment plan, any remaining balance on your credit card is usually forgiven.
As you can see, there are several options by which you can file for credit card bankruptcy. But in order to be sure if you apply to any of the chapters and which one is more convenient in your case, you must be well advised. Do not hesitate to contact Bankruptcy Now, where the specialist bankruptcy attorney Miami Michael J. Brooks will advise you to get a fresh start and a substantial improvement in your financial situation.