How to Declare Bankruptcy on Credit Cards

How to Declare Bankruptcy on Credit Cards

Financial distress can be overwhelming, and sometimes declaring bankruptcy on your credit cards may be the best option to regain control of your finances. Bankruptcy provides a legal framework for individuals who are unable to repay their debts, offering them a fresh start. If you find yourself in this situation, here are some steps to help you declare bankruptcy on your credit cards.

1. Evaluate your financial situation: Determine if bankruptcy is the right solution for you. Assess your debts, income, and assets to understand the severity of your financial hardship.

2. Seek professional advice: Consult a bankruptcy attorney or financial advisor who specializes in bankruptcy cases. They will guide you through the process and help you understand the potential outcomes.

3. Understand the types of bankruptcy: Familiarize yourself with the two primary types of bankruptcy for individuals – Chapter 7 and Chapter 13. Chapter 7 involves liquidating your assets to pay off debts, while Chapter 13 allows for a repayment plan based on your income.

4. File the bankruptcy petition: Gather your financial documents, including credit card statements, income records, and tax returns. Complete the necessary forms and file the bankruptcy petition with the appropriate court.

5. Attend the creditors’ meeting: After filing, you will have to attend a creditors’ meeting, where you will meet with your creditors and the bankruptcy trustee. This meeting allows creditors to ask questions about your financial situation.

6. Complete credit counseling: Before the bankruptcy process is finalized, you must complete a credit counseling course. This course aims to educate you on managing your finances and preventing future financial hardships.

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7. Obtain a discharge: If your bankruptcy case is successful, you will receive a discharge, which eliminates your personal liability for the credit card debts included in the bankruptcy.

Frequently Asked Questions:

1. Will bankruptcy eliminate all my credit card debts?
Bankruptcy can eliminate or reduce your credit card debts, but it may not discharge other types of debts like student loans or child support payments.

2. Will declaring bankruptcy hurt my credit score?
Yes, bankruptcy will negatively impact your credit score. However, it also provides an opportunity to rebuild your credit over time.

3. Can I choose which credit card debts to include in bankruptcy?
When filing for bankruptcy, you must disclose all your debts, including credit card debts. You cannot selectively include or exclude specific debts.

4. Can I keep any of my credit cards after bankruptcy?
In most cases, credit cards will be canceled as part of the bankruptcy process. However, some secured credit cards may allow you to keep them by depositing funds as collateral.

5. Can I apply for credit cards after bankruptcy?
Although obtaining new credit cards after bankruptcy may be challenging, you can rebuild your credit over time and eventually regain access to credit.

6. How long does bankruptcy stay on my credit report?
Bankruptcy can remain on your credit report for up to ten years, depending on the type of bankruptcy you file.

7. Can my credit cards be discharged in bankruptcy if I incurred the debt fraudulently?
If you obtained credit cards or made purchases with fraudulent intent, those debts may not be dischargeable in bankruptcy.