Jan 08, · Credit card debt can prevent you from paying your day-to-day living expenses. By filing a Chapter 7 bankruptcy case, you can get rid of credit card debt while protecting your property. However, you need to qualify for Chapter 7 by having income that is . If you use a single credit card to buy more than $ worth of luxury goods or services within 90 days of filing for bankruptcy, the debt is presumed to be nondischargeable. Bankruptcy law defines "luxury goods or services" to exclude "goods or services reasonably necessary for the support or maintenance" of you or your karacto.xyz: Cara O'neill, Attorney. Credit card debt can be discharged by filing for bankruptcy. You can't just discharge credit card debt, though. You need to list all of your debts during bankruptcy proceedings. Depending on the type of bankruptcy, your unsecured debt may be discharged or you'll pay a part of what's owed.
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Some of these debts can be discharged by bankruptcy, and others can't. Debts that cannot generally be discharged by bankruptcy include taxes, student loans, alimony payments, child support payments, fines and court-ordered settlements for drunk-driving offenses. Most credit card debts can be discharged by bankruptcy, but there are some exceptions.
These include secured credit card debt and debt ruled by a court to be nondischargeable. Most credit card debt is unsecured, meaning that there are no liens on the property you purchase with the credit card. Unsecured debt is usually discharged completely in Chapter 7 bankruptcy, but Chapter 13 bankruptcy may require you to pay a portion of what you owe.
If you have a secured credit card, your creditors may have a lien on whatever you purchased. If this is the case, they can repossess these items for nonpayment even if you file for bankruptcy. If your creditors believe you may have used your credit card even though you knew you were going to file for bankruptcy, they can file a complaint of nondischargeability with the bankruptcy court.
The court will examine the facts and make a ruling, but if they decide the debt is nondischargeable, you will be required to pay it despite filing for bankruptcy. Using your credit card with the intent of declaring bankruptcy is considered a type of fraud. Even if you actually had no intent to commit fraud at the time, the court will assume you did. The debt will not be ruled dischargeable unless you can provide the court with convincing evidence that you were not planning to file for bankruptcy at the time and that you intended to repay the debt when you incurred it.
Scott Thompson has been writing professionally since , beginning with the "Pequawket Valley News. His work has also appeared in "Talebones" magazine and the "Strange Pleasures" anthology. Tip You can't just declare bankruptcy on your credit card debt, as you'll be required to list all of your debts at the time of filing.
Video of the Day. Failure to pay results in a forfeiture of your right to continue using the item. Exception: You are allowed to surrender the vehicle, jewelry or merchandise back to the lender and eliminate your obligation to pay. You are not obligated to keep an item just because the lender has a security interest. Child support and alimony: Fortunately, you may not eliminate a legal obligation to pay child support or alimony.
Any outstanding balance owed at the time of filing will still remain after the case is over. Ex-spouse legal fees and credit card debt: In many divorce decrees, 1 spouse agrees to pay for legal fees or some outstanding debts owed by the other spouse. These debts will survive your bankruptcy. For example, if you agree to pay the credit card balances in your name and the name of your ex-spouse, you could not then turn around and file bankruptcy to wipe out those debts or the agreement to pay.
Your ex-spouse could still force you to pay those bills. Rebuilding your credit can be a long process when going in blind. Check your credit report and credit score for free at myBankrate. Restitution: Court-ordered restitution is not dischargeable in bankruptcy.
Restitution is a court-ordered sum of money you must pay for causing financial loss or personal injury to another. Income tax liability: You can wipe out some income tax liability, but there is a very specific and extensive test required to do so. Read more Bankruptcy Adviser columns and more stories about debt management.
The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. How We Make Money. Justin Harelik The Bankruptcy Adviser. Key Principles We value your trust.
Share this page. Secured debts. Child support and alimony. Ex-spouse legal fees and credit card debt. Car accident due to intoxication or willful and malicious intent. Income tax liability. Related Links: Credit card balance transfer: A good idea? Escape route for student loan co-signer? Is there a way out from car title loans? Related Articles: Millennials: Why upbeat? It depends Bankruptcy doesn't make debt disappear Can bankruptcy eliminate tax bills? Create a news alert for "debt".
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