Many people use credit cards to pay for expenses and although these borrowers intend to repay the debt, there are sometimes situations where they are unable to.
Credit cards often have high interest rates as well and even borrowers who make minimum payments aren’t able to get ahead. Their payments go to the accrued monthly interest charges, which it makes it very difficult to pay down the principal amount of the debt.
Most credit card debt can be discharged in bankruptcy and it may be an option borrowers want to consider in order to regain control of their finances.
Chapter 7 bankruptcy
The borrower must meet income requirements to file for Chapter 7 bankruptcy. It may be the best option for people who owe more than they can reasonably afford to repay or those who cannot pay off the credit card debt in a reasonable amount of time.
Many people who file for Chapter 7 bankruptcy may have their debt eliminated in about 90 days, however the accounts listed on their credit report will not disappear. Instead, they are noted as discharged through bankruptcy.
Chapter 13 bankruptcy
Filing for Chapter 13 bankruptcy may be the best option for borrowers who are unable to repay all of their credit card debt but do not qualify for Chapter 7 bankruptcy. With this type of bankruptcy, people pay a portion of their debt on a repayment schedule.
As the borrower repays the debt, their accounts will be noted as included in bankruptcy. When the borrower completes the repayment schedule and receives a discharge, the account information will be updated to discharged through bankruptcy.
An experienced bankruptcy attorney can help borrowers determine which type of bankruptcy is right for their circumstances.