Is Bankruptcy a Reasonable Option for Eliminating Credit Card Debt?

Getting behind on your credit card bills is an all-too-common problem. Some people find themselves in debt after suddenly being hit by a medical emergency for which they charged all their expenses, or maybe they lost their source of income and used their cards to pay for living expenses. Others may have indulged in a round of retail therapy or embarked on an indulgent vacation filled with decadent eating and drinking and lavish excursions. Whatever leads to an inability to pay credit card debt, bankruptcy may be a good way to get out of it – but that’s not always the case. Let’s take a closer look at whether a bankruptcy filing I the right way to get out from under credit card debt.

First, let’s understand what filing for bankruptcy is. It is essentially an appeal to the courts that says you do not and will not have the means to pay back your creditors and pay for your daily living expenses too. But to have your credit card debts dismissed under a Chapter 7 bankruptcy, you have to prove that you qualify by showing that your income is below the average median in your state. Failing that you can apply for a Chapter 13 bankruptcy. Though this will not eliminate all of your debt, it will reorganize it so that you might be given more time to pay, or a reduced interest rate, or your total amount due may be diminished. However, it is important that if you are provided with the opportunity to mitigate your debts via a Chapter 13 bankruptcy plan, you keep up with your payments. Failing to stick to the plan can lead to significant repercussions.

Though many people look to bankruptcy to get out of debt, it is important to remember that credit card companies can object to certain discharges. If you have used your credit card to pay for non-dischargeable debts or for luxury items, the court is likely to look askance at your filing and agree with your creditor, especially if you have done so within a few months of your bankruptcy petition.

If you need information on whether you are a good candidate for a bankruptcy filing, our experienced attorneys can help. Contact us today to set up a time to discuss your situation.