There is no such thing as credit card bankruptcy, to begin with. Chapter 7 bankruptcy and Chapter 13 bankruptcy are the two categories of personal bankruptcy. When filing for either of these forms of bankruptcy, you must list all of your debts, including credit cards, mortgage, medical expenses, and auto loans, among others. You cannot pick and choose which debts to list. You are required by federal law to identify all of your debts.
Next, consumers typically use one of two varieties of credit cards. There are standard, multi-function, multiple-location cards. These credit cards are predominantly Mastercard™ and Visa™ cards. The second sort are store credit cards, which are designed to be used exclusively in the stores of a particular company. This is exemplified by a Sears credit card.
Additionally, there are two categories of debt: unsecured and secured. The majority of the time, credit cards with multiple uses and locations and store credit cards generate unsecured debt. This indicates that you provided no collateral for the credit card loan you used to make the purchase. With certain store credit cards, however, when you purchase durable products such as appliances, jewelry, etc., the store will retain a security interest in the purchased items. This means that if you do not pay the item's credit card debt, the store may seek to repossess the item.
If the majority of your credit card debt is from multi-purpose, multi-location cards and is unsecured debt, Chapter 7 bankruptcy may be your best option because it discharges unsecured debt. Obviously, you must consider all factors, as you may lose property in a Chapter 7 bankruptcy.
You can file Chapter 13 bankruptcy if the majority of your credit card debt is from store credit cards where the store retains a security interest in the items purchased. Depending on a variety of factors, you may be able to pay the items' value rather than their original price.
Remember that when you file for bankruptcy, you are filing against all of your creditors, not just credit cards. It is also essential to remember that filing for personal bankruptcy can result in the loss of property and long-term damage to your credit. The decision to declare bankruptcy should not be chosen lightly. Consider all of your financial obligations, not just your credit card debt.
This is commonplace knowledge. Consult an attorney licensed in your state if you require specific information or have any queries of any kind.
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