Credit cards have unquestionably made our lives easier – and for some of us, it may have made life too easy. The temptation to simply reach into our pockets and pull out a card to pay for something we want can quickly lead to debt that gets beyond our ability to pay. If this has happened to you – whether as a lack of discipline or in response to a need that is out of your control (such as a job loss or illness), your best option may be to file for either Chapter 7 or Chapter 13 bankruptcy. The two are significantly different, and the appropriate one will be determined by your individual circumstances.

The biggest difference between Chapter 7 and Chapter 13 bankruptcy is that a Chapter 7 filing will discharge your debts in exchange for liquidating existing assets, while Chapter 13 bankruptcy represents a reorganization of debts and allows you to retain assets. In plain language, this means that under Chapter 7 you no longer have an obligation to pay but you also have to make significant sacrifices, and under Chapter 13 you agree to continue paying over a period of time.

Though Chapter 7 may sound like a better answer – and an easy way to eliminate your credit card debt – when you file for bankruptcy you will have to detail all of your debts, income and assets.  You may not qualify for Chapter 7 bankruptcy if your income is high enough for a payment plan to work, in which case you will be forced to turn to Chapter 13, agreeing to pay off debts over a three-to-five-year period. Once you’ve filed you will put a stop to all collection efforts, but your creditors will be able to request the liquidation of your assets, so it is a good idea to do a thorough analysis of your economic situation prior to commencing any kind of bankruptcy. You should also recognize that any debt that you have accumulated on your credit card immediately prior to filing for bankruptcy will be closely reviewed to determine whether your expenditures were for necessities or luxuries. If you decide to run up your credit card with expensive items prior to filing, those purchases will be spotted, and will likely be discharged.

If you are facing credit card debt that feels insurmountable, we can help guide you to the solution that is best for your situation. Call us today for help in determining your best legal options.

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