Is credit card debt dischargeable in bankruptcy?

For individuals who want to clean up their credit history and stop using credit cards, bankruptcy can assist them. Thus, credit card debt is dischargeable in bankruptcy. Personal bankruptcy consists of two options according to individuals’ (commonly called debtors) income.

Chapter 7 is the bankruptcy option which allows debtors to wipe out unsecured debts such as credit card and medical bills. This means that debtors are no longer responsible for paying creditors the money they owe. Typically, credit cards and other debts are discharged, or cancelled, in four to six months from the time bankruptcy petitions are filed. Chapter 7 is mainly for debtors with little to no income and thus unable to repay creditors.

Chapter 13, however, is for debtors with regular income and unsecured and secured debts. Examples of secured debts are mortgage and car payments. Under a chapter 13 repayment plan, debtors are required to pay a bankruptcy trustee every month for three to five years. Generally, priority debts such as secured debts are paid first. If there is any money left over, then unsecured debts such as credit card bills are paid. If not, those debts are discharged.

Debtors are not allowed to choose which bankruptcy chapter they want to file. Instead, they must complete a means test which subtracts their income from their state’s median income for their household size.

Individuals interested in filing bankruptcy should consult a bankruptcy lawyer. The lawyer will explain the eligibility requirements, such as paying filing fees and pre-bankruptcy credit counseling. Also, the bankruptcy lawyer will file bankruptcy petitions.