How to Get Rid of Credit Card Debt
Once debts get out of control, you may be forced to declare bankruptcy. The most common type of debt to force families into bankruptcy is medical debt, but credit card debts can also be a significant burden. In Texas, there are a few ways to absolve credit card debt through bankruptcy laws.
Using Chapter 7 Bankruptcy to Eliminate Credit Card Debt
Nearly any type of debt can be wiped out by declaring Chapter 7 bankruptcy. The only exceptions to this would be:
- Debt that was not declared at the time of filing for Chapter 7
- Certain types of taxes
- Any debt relating to spousal support, child support, or alimony
- Debt that is owed to a former spouse or child
- Student loan debt
- Fines and penalties that are owed to government agencies
- Amount the debtor owes to a victim of a car accident if they were drunk
- Money that is owed back to some types of retirement plans
- Homeowners association fees
- Lawyer fees for child arrangement cases, such as custody battles and child support
- Any fines the court deems necessary, such as criminal restitution
The first step of filing for Chapter 7 bankruptcy is to relinquish your rights to any property that is non-exempt. The bankruptcy trustee will sell this property for you as quickly as possible, and that money will go directly towards paying off your debts. Because credit card debt is an unsecured debt and low priority, it will be forgiven after Chapter 7 is filed.
Using Chapter 13 Bankruptcy to Eliminate Credit Card Debt
Some people may find that filing Chapter 13 bankruptcy is a better solution for their personal financial situation. When a debtor files for Chapter 13, they may repay some or all of their debt to certain creditors. These payments are first approved and then scheduled over the course of up to five years. However, this is usually only a small amount of the unsecured debt that is owed, such as credit card debt. If you have a high level of disposable income, this may be more difficult to achieve, but for most people, the amount they pay is considerably less than what they owe. After the payment plan has been completed in the eyes the court, any unsecured debt that is still left will be forgiven.
Chapter 7 and Chapter 13 bankruptcy works for a lot of people, but not everyone can qualify for these debt relief filings. If the debt was incurred because of an illegal activity, then the court will not grant you permission to declare bankruptcy. Some examples of fraudulent activity that can include:
- Lying or misrepresenting certain facts on a credit card application
- Spending more than $650 on luxury goods, vacations, or services within 90 days of filing
- Taking a cash advance up to 70 days before filing that is over $925
Chapter 7 and Chapter 13 bankruptcy is a good way to find debt relief. The laws are tricky, and you should talk to a qualified attorney about your options.