Credit card debt can quickly spiral out of control. If you are overwhelmed with your credit card debt and worried about your financial future, filing for bankruptcy may be an option. To determine whether filing for bankruptcy is a good way for you to combat your credit card debt, contact the Ohio debt relief attorneys of Cleveland Bankruptcy Attorneys at (216) 586-6600.
Our Cleveland credit card debt attorneys understand just how stressful it can be to have massive amounts of credit card debt, and we are committed to helping you get back on the path to financial stability.
How Chapter 7 and Chapter 13 Bankruptcy Can Help with Credit Card Debt
Credit card debt is considered an unsecured debt, meaning it is not backed by any type of collateral. If you choose to file for Chapter 7 bankruptcy, your unsecured debts can be discharged. In the event that you are not eligible for Chapter 7, your credit card debt can be reorganized under a Chapter 13 repayment plan.
The Chapter 13 repayment plan lasts for three to five years and will allow you to pay off your debts in affordable monthly payments. Since credit card debt usually has the lowest priority in Chapter 13 bankruptcy plans, you may pay very little or none of it.
Is Chapter 7 or Chapter 13 Bankruptcy Right for Credit Card Debt?
Your current financial situation will determine whether you should file for Chapter 7 or Chapter 13 bankruptcy in order to find relief from credit card debt. If the majority of your debt is credit card debt, you make less than the median income in Ohio, and do not have any income left over after paying your bills and living expenses, Chapter 7 bankruptcy can help you get back on your feet.
However, if you have enough income after deducting expenses as well as significant assets like a property or vehicle or recent tax debts, Chapter 13 may be the better solution and protect your home from pending foreclosure. To determine which type of bankruptcy can solve your credit card debt issues, it is in your best interest to consult a Cleveland credit card debt lawyer.
Can a Court Choose to Not Discharge Credit Card Debt?
If you file for Chapter 7 bankruptcy, any assets you have that are non-exempt will be liquidated so that the proceeds can be used to repay your creditors. Due to the fact that credit card debt is low in importance, your credit card company may never be repaid. However, a court judge may choose to not discharge your credit card debt in the following circumstances:
- You used a credit card to purchase luxury goods or services. If you used a credit card to purchase goods or services that are valued at $650 or more within 90 days of filing for bankruptcy, a judge may choose not to discharge the debt. It’s important to note that goods or services like clothing, food, and gas that are essential for supporting you and your family are typically excluded.
- You used a credit card in order to take out a large cash advance. If you used a credit card to take out a large cash advance valued at $925 or more within 70 days of filing, the debt will be seen as non-dischargeable, meaning it cannot be eliminated through a bankruptcy proceeding.
- Your credit card usage demonstrated fraud. Any credit card debt that was incurred through fraud will not be dischargeable. If you went on a shopping spree prior to filing for bankruptcy, racked up credit card charges immediately after you spoke to an attorney about bankruptcy, or received multiple past due notices, fraud may suspected.
How to Avoid Problems with Credit Card Debt in Bankruptcy
If you’d like to wipe out or reduce your credit card debt in bankruptcy, there are several things you can do to avoid any issues. You should be honest when applying for credit cards and reveal all of your income and expenses in any paperwork related to your bankruptcy case.
You should also completely stop using your credit cards for a minimum of 90 days prior to filing for bankruptcy. Hiring an experienced Cleveland credit card debt attorney can also help increase your chances of achieving a favorable case outcome and freeing yourself of the financial burden your credit card debt has caused.
Consult a Credit Card Debt Lawyer at Cleveland Bankruptcy Attorneys
Filing for Chapter 7 bankruptcy may be ideal for you if you cannot afford to pay off your credit card debt and are searching for a fresh start. If your income prevents you from qualifying for Chapter 7 bankruptcy and/or you have expensive assets, Chapter 13 can help reduce your credit card debt through a payment plan that you can afford.