Credit card debt can be overwhelming. Few people intend to rack up as much debt as they do. Many, in fact, hope to catch a financial break somewhere down the line in order to pay off their bills and any interest. Unfortunately, when the interest gets too high, you can get stuck paying off the accruing interest without ever chipping away at the principal balance.
If you find yourself in significant credit card debt, are being harassed by creditors daily, and cannot afford to make your minimum monthly payment, filing for bankruptcy may be a good option for you. With a dedicated and skilled Arizona bankruptcy attorney on your side, filing bankruptcy for credit card debt can help you get your life back on track.
Can You File Bankruptcy on Just Credit Cards?
The bad news is that you cannot pick and choose which debts you want to include in a bankruptcy. The good news, however, is that there are different kinds of bankruptcies—called chapters—that can help you focus on particular kinds of debt. Chapters can also help you determine how you’d like to deal with your debt. For instance, whether you’d like to wipe the slate clean by discharging debt, or restructuring your debt by participating in a realistic repayment plan.
Chapter 7 Bankruptcy for Credit Card Debt
Chapter 7 bankruptcy is good for those who are looking to wipe out, or discharge, significant portions of their debt, credit card or otherwise. Luckily, credit card debt is one of the most easily dischargeable debts. Because credit card debt is considered unsecured debt—that is, it has no collateral backing like a mortgage or car loan—most if not all of it can be eliminated in Chapter 7 bankruptcy.
When you file Chapter 7 bankruptcy for credit cards, a bankruptcy trustee may liquidate your assets to pay off your creditors, but credit card collectors are usually at the bottom of this list. For this reason, in most cases you won’t have to pay your credit card creditors.
To qualify for Chapter 7 bankruptcy for credit card debt, you will need to prove that you earn less than the median monthly income in your area. Or, prove that you cannot afford the amount of your debts in spite of earning income above the median. This is called the bankruptcy means test.
Chapter 13 Bankruptcy for Credit Card Debt
Even if you don’t qualify for a Chapter 7 bankruptcy in Arizona, you may still be able to discharge a significant portion of your credit card debt in a Chapter 13 bankruptcy.
In this type of personal bankruptcy, you get to keep your assets while your debts are consolidated, restructured, and/or discharged. This process allows you to make affordable monthly payments to pay down your remaining debts within three to five years of your bankruptcy case.
The amount of credit card debt you’ll actually end up repaying in a Chapter 13 bankruptcy depends on two important factors:
- The amount of disposable income you have.
- The value of any nonexempt property you own.
At the end of your repayment plan, though, it’s common for any remaining credit card debt to be discharged.
How Can An Arizona Bankruptcy Attorney Help?
If you’ve fallen behind on credit card payments, are struggling with unpaid medical bills, or are underwater in your home, contact a bankruptcy specialist at Lerner and Rowe Law Group. Our Arizona bankruptcy lawyers have helped hundreds of clients get a fresh financial start. Call to schedule an initial consultation at no cost to you. We’ll explore your legal options and help you make the right decision for you.
Reach us by phone at 602-667-7777 in Tucson, Phoenix, and throughout Arizona. You can also chat with a live representative online now, or submit the details of your case to our legal team using our secure contact form.