Credit Card Debt Treatment

In most cases, when you file bankruptcy San Diego, your credit cards and associated debt that you owe will be eliminated.  Lower income earners, who will usually qualify for straight bankruptcy under Chapter 7, can eliminate all of their credit card debt and start with a clean slate.  Higher income earners, who generally will not qualify for Chapter 7 and will have to file a repayment case under Chapter 13 and repay part, or in some cases all, of their credit card debt in bankruptcy in San Diego.

Effect of Bankruptcy on Credit Cards

If your lawyer determines that you qualify for bankruptcy under Chapter 7, you can file a credit card bankruptcy and can generally expect your credit cards and associated debt to be eliminated, absent any fraud or other wrongdoing, such as making charges on your card before you file bankruptcy. If your lawyer determines that you need to file under Chapter 13, usually due to higher income levels, then you will have to repay as much credit card debt as you can afford to pay based upon your available disposable income.

Unsecured Debt Repayment

When you file your case, all of your credit cards and associated collection accounts and other similar debt is referred to as “unsecured debt.”   Your attorney will perform a disposable income test to determine how much, if any, of your unsecured debt you must repay in a Chapter 13 case.  A similar test is applied in Chapter 11 and Chapter 12 cases when you file bankruptcy on credit cards.

Recent Charges on Credit Cards Before Bankruptcy

When you signed a credit card customer agreement, you promise to repay charges that you make. If you make charges that you make on your cards at a time that you already know you will be filing bankruptcy, then that can evidence absence of a good faith intention to repay the charges that you made. That lack of a good faith intent to repay the charges is a grounds for denying you a discharge of the charges that you made on your cards.

Charges Immediately Before Filing

If you have incurred credit card debt immediately before filing your bankruptcy case, or if you have incurred large charges on your cards and then didn’t make any payments whatsoever on the cards, then your lender may (and likely will) object to you receiving a discharge and you will not be able to file on the recently incurred credit card debt.

If you cannot file on one or more cards because of too recent charges, then you will not be able to get out of debt San Diego and you will be denied credit card debt relief.  Therefore, it is important to stop using your credit cards once you know you are going to file bankruptcy.

Charges Without Payments

If you have made recent charges on your credit cards, or made large charges and then didn’t make any payments, you should discuss this in detail with an experienced San Diego bankruptcy attorney, to determine whether the card balances will be eliminated in full so that you can have a fresh start.