Can you get rid of credit cards in bankruptcy?

On Behalf of | Jul 2, 2021 | Bankruptcy

If you are having trouble paying your bills and are considering methods of reducing what you owe, one of the options may be to go into bankruptcy. Consumer bankruptcies usually include either Chapter 7 or Chapter 13 bankruptcy. Both of these have the potential to help you eliminate credit card debt.

With Chapter 7 bankruptcy, you’re seeking a liquidation bankruptcy that completely dismisses unsecured debts that qualify for the program. With Chapter 13, you’re agreeing to a consolidated payment plan that helps you pay back a portion of what you owe over time, making it easier to afford what you owe. On top of that, any remaining debt at the conclusion of the repayment period may be discharged.

Yes, you can get rid of credit cards during bankruptcy

For the most part, you can get rid of credit cards during bankruptcy, but there is an exception. If you have recently taken out the card and used it, adding debt prior to filing for bankruptcy, then the court may ask that you repay that debt. Why? Creating debt and then going into bankruptcy to avoid paying it intentionally is fraudulent.

Can you keep any of your credit cards after going through bankruptcy?

If you want to keep one or two credit cards after bankruptcy, that might be possible if they were not a part of the bankruptcy. For example, if you have a card that is paid off between six and 12 months before your bankruptcy, then you may be able to keep that card open. You won’t be able to use it during the bankruptcy in most cases, and if you do, the debts won’t be dischargeable during your bankruptcy. Keep that in mind.

Some people do choose to maintain a card, since getting credit is more difficult following bankruptcy. However, this isn’t right method for everyone. It’s a good idea to talk to someone about the legal process of bankruptcy and if it’s right for you. With the right plan in place, it’s possible to get ahead of debt and to get back into a position of financial security.