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Bankruptcy & How it Impacts Your Credit Card Debt

Back to school shopping may have left you facing a pile of credit card bills. If you are struggling financially and you have a significant amount of credit card debt, it may be time to consider filing for bankruptcy protection. How does bankruptcy impact your credit card debt? Typically, this type of debt is unsecured, which means there is no collateral pledged to secure the debt. In both a Chapter 7 and Chapter 13 filing, the majority (if not all) of your unsecured debt is discharged or cancelled. The two main exceptions for credit card debt not being eliminated in your filing occur if you used the card fraudulently or if you lied to obtain the credit line. If a credit card company can establish that you incurred the charged on the credit card by fraud, the debt will not be discharged and you will remain liable to pay it. The most common type of fraud is that the debtor charged up the credit card without any intent to pay the bill.   A few examples of how fraud may be proven includes maxing out your credit limit or purchasing frivolous items, especially in the days leading up to your bankruptcy filing. Additionally, if a debtor lied on the credit application to obtain the credit card, the entire balance on the account may be non-dischargeable.  For example, if you falsely stated your income in order to get approved for the card, it is possible you will remain liable for the entire amount.  This type of challenge to discharge is not common since card issuers rarely take the time to investigate the application for fabrications, but it can happen. If you are considering filing for Chapter 7 or Chapter 13 and you are concerned about your credit card debt, be sure to discuss it with an experienced attorney at Levitt & Slafkes before you file your case. If you are interested in learning how filing a bankruptcy case can benefit you, contact Levitt & Slafkes, PC, at 973-323-2953. You can also reach us by filling out our online form. We represent debtors in Chapter 7, Chapter 13 and Chapter 11 filings. Let us help you get the fresh financial start you need today.


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