Take The First Step Toward A Fresh Financial Start

Will bankruptcy clear your credit card debt?

On Behalf of | Jun 11, 2021 | Consumer Bankruptcy |

Consumer bankruptcy clears credit card debt in most situations; the court refers to it as discharging your credit card debt. Chapter 7 bankruptcy discharges unsecured, non-priority debt. In Illinois, bankruptcy stays on your credit report for 10 years, so you can discuss with a professional if it’s worth it in your situation. When your debt is overwhelming and virtually impossible to pay back, you may find it beneficial to file for bankruptcy.

Giving up nonexempt property

When you file for consumer bankruptcy, you must give up your nonexempt property to pay off as much of your debts as possible. There are limitations on how much of your property the trustee on your case can sell. You have the option to sell it yourself if you think you can get a better price. Most people who file for Chapter 7 bankruptcy don’t have any property that the trustee can take away. Examples of nonexempt property are extra houses and cars, valuable artwork and expensive clothing and jewelry. Your primary residence, car and work tools are exempt property.

Situations in which credit card debt doesn’t go away

Bankruptcy will not discharge credit card debt if your creditor proves that you deceived them in order to get approved. Deception includes lying on any part of your application. If you used your credit card to buy a luxury good or service above $725 within 90 days of filing for bankruptcy, then the court may decline to discharge your credit card debt. You can’t get a cash advance of more than $1,000 within 70 days of your bankruptcy filing either. It could cause the court to rule that you still need to pay off your credit card debt. In general, it’s not a good idea to use your credit cards before filing for bankruptcy.

Consumer bankruptcy discharges credit card debt in most situations. You should consult with a lawyer to know the details of the law that will affect your case.