Bankruptcy is a legal process which is declared by a person in court, to prove that he is insolvent. As a result, he may either have to pay off the debts through a debt restructure method or may have to liquidate the assets, properties in order to pay off the dues to the creditors and lenders. This helps the debtor to get relief from all of the liabilities. There are mainly two chapters under which personal bankruptcy can be filed, and these are the Chapter 7 and the Chapter 13 bankruptcy. However, before filing bankruptcy, it is important for you to know which debts can be included within your bankruptcy filing.
Credit card debt and bankruptcy
Credit card debts, mortgagees, all other kinds of loans (secured or unsecured), any other types of debts can be included in bankruptcy, with the exception of alimony and child support payments. Now, coming to the credit card pay off through bankruptcy, there are various nuances which you will be required to consider.
First of all, it is important for you to consider whether or not all of the credit card debts you have, are still within the SOL or the Statute of Limitations. This is the time limit within which a creditor can sue you, if you have not yet paid the dues. The time limit starts from the date of last payment on the debt. However, the time limit varies from one state to the other. In case any debt has past the SOL, the creditor won?t be able to win a lawsuit against you. So, as you are already in debt problem, it would be better for you to dispute this debt off your credit report. This may rather help you solve some of the debt problem.
Other than this, if you are in a community property state, and if you are married, there can be various nuances associated with credit card debt. So, it is important to be aware of that too. Thus, if you are planning to file bankruptcy, you should be able to take the help of an attorney. He/she is going to help you with handling the bankruptcy filing process. He may also help you determine, if all of your credit card debts are going to get paid off through the bankruptcy filing. In addition, you may also be able to get some help regarding the decision as to which Chapter would be better for you.
If you are too hard pressed for money, and if your income is even less than the median income of the state you are in, you may be able to file bankruptcy under Chapter 7. This helps in discharging almost all of your debts. However, in the process of paying down all of your credit card debts through Chapter 7 bankruptcy, you may have to lose all of your assets. So, it is better to discuss all of these nuances with your attorney.
On the other hand, if you do not qualify for Chapter 7 bankruptcy, you may be required to file the same under Chapter 13. This is more like a re-payment option, in which you are required to make monthly payments against the credit card debts and any other debts. However, this re-organization plan is issued by the bankruptcy court, and thus is done as per your afford-ability. Under Chapter 13, you are not required to lose any of your assets in order to pay down your creditors.
So, you can see that it is possible to pay down your credit card debts through bankruptcy. However, if you can lower the debt amount after the disputes based on wrong listings and SOL, it may become easier for you to handle the debt issues and also avoid filing bankruptcy.
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