Credit Card Debt in a Chapter 7 Bankruptcy

Do you have credit card debt that you are unable to pay? Are creditors calling you day and night? For most people, the constant harassment from debt collectors is what leads them to consider bankruptcy relief. As with residents in other states, Alabama residents have large amounts of debt in many forms. It’s no surprise, then, that the average Alabama resident carries thousands of dollars in credit card debt. Credit card debt is the most common type of debt in America and is one of the biggest reasons why most people think about filing for Chapter 7 bankruptcy.

Credit card debt is referred to as unsecured debt. Chapter 7 bankruptcy is designed to quickly eliminate all of your credit card debt. In Chapter 7 bankruptcy, debtors are usually able to discharge all credit card debts. Generally, credit card debts are treated like other unsecured claims in Chapter 7 cases. In most cases, your obligation to pay the balance will be discharged upon successful completion of your bankruptcy case.

Cosigners on Credit Card Debt

When you file a Chapter 7 bankruptcy, only you are discharged. Chapter 7 does not protect guarantors or cosigners. If anyone else is liable for charges that you made on a credit card, they will still be liable after you file Chapter 7 bankruptcy, regardless of whether the claim is dischargeable against you.

Credit Card Fraud

The following circumstances can cause credit card companies to challenge your discharge:

  • Increase in credit card usage shortly before filing bankruptcy
  • Lied on credit card application
  • Newly issued credit card
  • Large cash advances in months before filing bankruptcy
  • Use of credit card for recent travel or vacations
  • Pattern of borrowing on one card to make payments on other cards>/li>
  • Exceeding credit limit
  • Using credit card when unemployed
  • Large balance at filing
  • Purchase of luxury goods before filing bankruptcy
  • Charges made after consulting bankruptcy lawyer

Free Bankruptcy Consultation

In some cases, bankruptcy might not be the best alternative. If you have already decided to file for bankruptcy, continuing to make credit card payments is usually a waste of money. We understand why people are struggling to pay credit card debt and are tempted to file bankruptcy. If your credit card debt is overwhelming, please call Ferguson & Ferguson today to schedule a free initial consultation with an experienced attorney. Our free consultation makes it easy for you to learn whether bankruptcy is the best solution for you. Call 256-534-3435 to schedule your no obligation, free consultation now.

Huntsville Office Location:
303 Williams Avenue SW
Suite 321
Huntsville, AL 35801

Decatur Office Location:
211 Oak Street
Decatur, AL 35601