Can I Wipe Out My Credit Card Debt With Bankruptcy?
Bankruptcy can be a fast and simple way to wipe out a great deal of credit card debt that has piled up, in many cases over the course of years. However, there are also other consequences to bankruptcy that may not make it the best choice for you if you have assets you want to protect. The experienced bankruptcy attorneys at Oswalt Law Group in Phoenix can help you decide if bankruptcy is the right choice for you.
Bankruptcy and Credit Card Debt
Whether you file for Chapter 7 or Chapter 13, you can often discharge most or all of your credit card debt at the end of your bankruptcy. However, there are differences in the way this type of debt, known as “unsecured debt,” is handled in each type of bankruptcy case. If you file Chapter 7, also known as a “liquidation bankruptcy,” you are telling the court that you really have no assets and that anything you do have, beyond those assets that are protected by exemptions, can be used to pay creditors. In Chapter 7, unsecured creditors usually collect little to nothing on their debts before your case is discharged. In Chapter 13, however, you may be attempting to keep a house, a car and other assets that you have accumulated. In this case, your unsecured debtors may receive a percentage of what is owed to them through regular payments you make to a bankruptcy trustee. At the end of your case, any debt that has not been paid will be discharged.
Be Careful of Spending and Cash Advances
For the most part, the way that credit card debt is handled during bankruptcy is straightforward. However, there are exceptions to this rule if the debtor has used the credit card immediately prior to bankruptcy. Using your credit cards with no intent to pay the debt is considered fraud. In order to avoid this problem, the bankruptcy courts set up certain rules on what may constitute the fraudulent use of your card. For example, if you use your card to take out numerous cash advances and file bankruptcy 90 days later, the court may take the position that you were simply trying to get as much cash as possible out of your card before filing bankruptcy. If the court decides that was the case, you could be denied the right to discharge that debt. If you have questions about your credit card debt and how you can discharge it during bankruptcy, talk to the bankruptcy attorneys at the Oswalt Law Group in Phoenix.