Filing Bankruptcy on Credit Cards

If you are experiencing difficulty paying your bills due to excessive credit card debt, it may be time to file for bankruptcy on credit cards. Credit card debt can get out of control rapidly due to the high interest rates associated with them. Life can become very stressful when you are not bringing in enough money to pay the bills. Bankruptcy is designed to help people reclaim their lives.

Challenges By Creditors

Because your creditors can challenge your discharge petition, you must be careful that you have not done anything that would give the court a reason to deny your petition on particular debts. The following are reasons a creditor may challenge your petition:

• Recent cash advances;
• Pattern of using one credit card to pay other credit card payments;
• Recent activity on the card for things such as travel or vacations;
• Non-necessary purchases on cards; and
• Exceeding your credit limit.

Chapter 7

Chapter 7 bankruptcy allows you to completely erase all debts that are included (if the petition is granted). It is best suited for individuals who have either no or few assets and a modest income. All credit card debt can be included in your chapter 7 bankruptcy. Some individuals keep one credit card out of the bankruptcy so that they will have some credit afterward. This can be a good move, but if that creditor decides to cancel the card, it will be ineffective.

Chapter 13

Chapter 13 bankruptcy allows individuals to restructure their debt. The amount that is owed is reduced, and the individual pays a lesser monthly fee on all debts that are included in the bankruptcy. This type of bankruptcy is often used by individuals who have some assets they wish to protect and a moderate income (enough to pay the monthly payments they will be required to pay to discharge a portion of their debt).

How Will Bankruptcy Effect My Credit?

Bankruptcy will stay on your credit for 7 to 10 years. You can rebuild your credit during this period by making all bill payments on time and using any credit you have wisely. Bankruptcy can make it difficult to obtain new credit for cars, housing, and other purchases. Additionally, you may be required to make a deposit before acquiring such services as cellular phone or home telephone and other household services due to your credit score.

Get Legal Help

If you are contemplating filing for bankruptcy due to excessive credit card bills, you should discuss your financial situation with a bankruptcy attorney in your area. An attorney will make the process of bankruptcy more manageable by representing you in court, filling out and filing your paperwork for you, and advising you of your options, rights and responsibilities.