Can I File Bankruptcy for Credit Card Debt?
Manalapan Bankruptcy Lawyers Can Help with Credit Card Bills
One of the primary advantages of bankruptcy is that it allows you to discharge your unsecured debt. Credit card debt is usually unsecured, nonpriority debt, meaning that it can be completely erased at the end of the bankruptcy process. Only in certain rare cases is this kind of debt nondischargeable. Although many people choose to file Chapter 7 bankruptcy for unmanageable credit card bills, Chapter 13 bankruptcy is also an option. This is often the best course for people who have nonexempt assets they wish to keep, and who can afford a repayment plan.
Credit card debt can quickly become overwhelming for anyone. Emergency car repairs, unforeseen illness and job loss can all substantially impact your finances and turn credit card payments into an insurmountable burden. At Garland & Mason, L.L.C., our Manalapan bankruptcy lawyers have been assisting people throughout New Jersey find debt relief, including residents of Monmouth, Mercer, Ocean and Middlesex Counties. If you are considering filing bankruptcy for credit card debt, then contact us today.
How Can Bankruptcy Help Me Get Rid of Credit Card Debt?
Most credit card debt is unsecured debt. (Certain retails store and bank credit cards may be secured, however.) If it is unsecured, then this means that it is not tied to any property or real estate, in contrast to debts like a mortgage which is secured by your house. Therefore, any kind of bankruptcy can usually eliminate all overdue credit card debt. Depending on your situation, including what other kinds of debt you owe, you may consider:
- Chapter 7 bankruptcy. In Chapter 7 bankruptcy, a trustee liquidates your nonexempt assets to pay a portion of what you owe. Then, your remaining unsecured debts are forgiven at the end of the bankruptcy process, which takes four to six months. This type of bankruptcy is often best for people who have large amounts of unsecured debt and few assets. However, depending on whether you use the New Jersey or federal bankruptcy exemptions, you may be able to file Chapter 7 while also keeping your home and much of your personal property.
- Chapter 13 bankruptcy. In Chapter 13 bankruptcy, you pay off a portion of your debts through a repayment plan administered by the courts. This may last three to five years. Then, at the end of the bankruptcy process, you receive a discharge of your remaining unsecured debts. This type of bankruptcy is often best for people who have unmanageable debts, such as unpaid credit card bills, but also have a stable job and the ability to meet the requirements for a Chapter 13 repayment plan. You also can keep your secured property in Chapter 13 and continue to pay down the balance, unless you voluntarily surrender it to eliminate a secured debt.
When is Credit Card Debt Nondischargeable in Bankruptcy?
For many people, the chief advantages of bankruptcy include the ability to completely eliminate credit card debt. However, there are some restrictions on when these debts are eligible for discharge. According to these restrictions, you cannot eliminate credit card debt that was incurred fraudulently. This means that your creditors can object to a discharge of certain debts, including:
- If you provided false information on your original credit card application. For example, if you exaggerated your income to secure a higher credit limit. However, this false information must have been a determining factor in the creditor’s decision to give you credit. Small errors are typically not enough to qualify as fraud during the bankruptcy process.
- You used a single credit card to purchase luxury goods in excess of $675 within 90 days of filing bankruptcy. Luxury items include any product or service that is nonessential. Food, gasoline and some clothing purchases are generally not luxury items. However, each case is different, so whether a specific purchase counts as a luxury good will depend on your unique circumstances.
- You took a cash advance of more than $950 from a single credit card within 70 days of filing bankruptcy. Any cash advance like this is automatically assumed to be fraudulent by the bankruptcy court.
The amounts for luxury good purchases and cash advances are subject to periodic adjustment. Additionally, a creditor may dispute the discharge of other debts as well. However, they must prove that you knowingly incurred the debt without the intention to ever pay it back. Even if the court presumes fraud, experienced bankruptcy lawyers can help you defend yourself against these allegations.
Questions about Filing Bankruptcy for Credit Card Debt? Call Our New Jersey Law Firm
Credit card debt is one of the most common reasons that people consider filing for bankruptcy. If you have questions about your legal options for relief from these debts, then contact our New Jersey bankruptcy lawyers today. We offer free initial consultations to individuals, families and businesses struggling with too much debt. Call (732) 358-2028 or contact us online to schedule a meeting.