Can an individual eliminate credit card debt by declaring bankruptcy? I didn’t think you could wipe it out, just get the bill collectors off your back. But, someone told me that it depends on which chapter of bankruptcy you use. The right 1 may eliminate credit card debt. I know someone who has ,000 in credit card debt and they are trying to do that to get rid of that debt! Is it really possible? Are there some restrictions in doing this. Can you ever get a credit card again if you do it?
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Can you eliminate credit card debt by declaring bankruptcy? 5:02 am on December 28, 2009 Permalink |
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Lauren F 2:29 am on December 28, 2009 Permalink |
It depends on what their income is, how they managed to get $80,000 in debt, and whether or not they have a reasonable ability to repay the debt. Also, if the debt was very recently incurred, that will make a bankruptcy court look a little skeptical at the claim.
Your friend should talk with a skilled bankruptcy attorney and determine if their situation makes sense for such a claim.
Be aware that the filing will trash their credit score and make it difficult, and very, very expensive, to get anything on credit for at least 10 years. The few banks/credit cards that might give them another chance know that the person can’t file for bankruptcy again, so they will charge at least 30% interest – maybe more – knowing the person will have to pay and can’t go elsewhere to get credit.
BTW – Are you aware that you are going to help pay this debt for them, in the form of higher interest rates you pay because this person did not keep his/her promises? There is no free lunch. When someone runs up this kind of debt and defaults, we all end up paying.
bcnu 2:29 am on December 28, 2009 Permalink |
Some bankruptcy courts could view massive credit card debt as evidence of criminal fraud and not discharge the most recent two years of such debt, absent some showing that the debtor had a reasonable expectation of being able to pay it off when first incurring the debt.
left the lights on again 2:29 am on December 28, 2009 Permalink |
Yes, you can. You can get it "wiped out", but based on your income, you may need to file Chapter 13 instead of 7. With a 13, you pay back a small portion of the debt over a 4-6 year period. After your bankruptcy has been discharged, you can get more credit cards, but they will be a significantly higher rate of interest. With any kind of personal bankruptcy, you can keep your home and vehicle and have other debts removed. It does stay on your credit report for a minimum of 7 years, which means anything involving credit will be given at a higher rate of interest.
I love the wwe divas 2:29 am on December 28, 2009 Permalink |
Chapter 7 bankruptcy will wipe out all unsecured debt.