Bankruptcy and Credit Card Debt
A San Francisco Bankruptcy Attorney discusses Bankruptcy and Credit Card Debt
Those pondering whether to file bankruptcy generally want to know what happens to credit card debt if bankruptcy is filed and upon discharge of a successful bankruptcy petition. Credit card debt is unsecured, meaning there is no collateral or other asset securing the loan amount. Depending on the type of bankruptcy filed, the credit card debt will either be eliminated entirely or repaid at a severely discounted rate. Often individuals who have stopped making payments on their credit card debt will be served with notice of a lawsuit filed on behalf of the respective credit card companies, seeking a judgment for the unpaid amount. Filing a bankruptcy petition will automatically stay those collection proceedings.
In chapter 7 bankruptcy, the unsecured credit card debt is eliminated upon discharge. The trustee overseeing the chapter 7 bankruptcy will collect all nonexempt assets, if available, to sell. Whatever proceeds result from the sale of those nonexempt assets are used to pay back down the credit card debt. It is important to note that even if the debts are not repaid at all, a bankruptcy discharge eliminates the debtor from any future liability regarding the listed credit card debt.
In a chapter 13 bankruptcy case, the amount the creditors are repaid generally depends on the financial situation of the debtor. Chapter 13 requires that the debtor has a source of income. If there is any “disposable income” available after monthly expenses and other deductions are taken into account (mortgage, child care, health costs, etc), those amounts are paid to the unsecured creditors. Generally the amounts repaid over the life of the Chapter 13 plan are a fraction of the actual amount owed, although it is possible for an individual who makes enough money to have enough disposable income to repay the unsecured creditors 100 percent. Bankruptcy can still be advantageous for that debtor, however, because the debts are generally repaid within three or five years (depending on the length of the repayment plan).
For those worried about obtaining credit after a bankruptcy discharge, lenders generally are willing to extend credit between 18 and 24 months after a discharge. In addition, those who want to start rebuilding their credit earlier can always apply for a secured credit card. Secured credit cards generally require a cash deposit before credit is extended up to that limit. This is advantageous for those who need to provide a credit card for car rentals or where cash is not accepted. Secured credit cards are also a reminder that even after bankruptcy it is possible to engage in regular transactions involving credit.
If you have questions regarding bankruptcy in San Francisco or bankruptcy in the greater Bay Area please contact our San Francisco Bankruptcy Attorneys at (415) 946-8882 for a free consultation or visit www.bkanswers.com and we can connect you with one of our experienced San Francisco Bankruptcy Attorneys. After you have spoken with one of our Bay Area bankruptcy attorneys, we can schedule you for a free face to face appointment in an office location nearest you. Our team of Bankruptcy Lawyers, Bankruptcy Customer Care Specialists and Bankuptcy staff supporting San Francisco and Bay Area consumers in debt can assist you with all aspects of your bankruptcy or bankruptcy litigation case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, San Francisco Bay Area!
