Bankruptcy and Credit Card Debt
A San Francisco bankruptcy attorney speaks on 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, one of several things can happen – the entire debt is discharged, partial repayment is made, or full repayment is made but at 0% interest.
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 on behalf of the creditors. Whatever money is collected, less the trustee fee, is distributed to the unsecured creditors. A majority of the chapter 7 cases filed are no-asset cases, meaning nothing is sold by the trustee and unsecured creditors receive no repayment.
In a chapter 13 bankruptcy case, the amount the creditors are repaid generally depends on the financial situation of the debtor. Often a chapter 13 case is filed in order to allow a debtor to catch up on missed mortgage or car payments and there is not enough leftover income to repay any unsecured debt. At the end of the repayment plan the unsecured debt is discharged.
Post-discharge can be a difficult time for many debtors when it comes to trying to obtain credit. There are several steps that can be taken in order to boost credit scores and have a more positive credit history. The easiest thing to do is obtain a secured credit card. Although you pay the balance ahead of time, the secured credit card does help establish your post-discharge credit history and will help increase your credit score. It also demonstrates to lenders that you are financially responsible and a good candidate for loans and other types of 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 or (1800) 941-6730 for a free consultation or visit www.sagarialaw.com and request a free face to face appointment in a Sagaria Law office location nearest you. Our team of Bankruptcy Lawyers, Bankruptcy Client 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!
