Personal bankruptcy and credit card debt

Credit card debt is a major issue for countless people across the state of Florida and the entire country. And while filing for personal bankruptcy is one option that people often turn to for effective debt relief, it’s important that they understand if and how bankruptcy will address their credit card-related debts and difficulties.

The Nest explains that filing for Chapter 13 or Chapter 7 bankruptcy can affect the way that credit card debt is discharged. For instance, people who file for Chapter 13 may still be required to pay a portion of the credit card debt that they owe, while those who file for Chapter 7 may not be held liable for repaying any of the amount due. Similarly, the effectiveness of bankruptcy in eliminating credit card debt can depend largely on whether or not that debt is considered dischargeable at all.

Debt incurred on a secured credit card is not always eligible to be discharged through bankruptcy. According to creditcards.com, secured credit cards extend a line of credit to borrowers and report card activity and payment history to the three primary credit bureaus. Unlike unsecured credit cards, however, secured cards require a security deposit and can be subject to liens by creditors. As a result, filing for bankruptcy does not ensure that creditors cannot pursue claims against items bought with secured cards.

It’s also important to note that credit card debt found to be accumulated under fraudulent pretenses is not eligible for bankruptcy discharge. Within 70 days of filing for personal bankruptcy, for instance, no more than $875 worth of debt can be placed on a credit card before it is considered fraud.