Filing Credit Card Bankruptcy

Credit card offers seem to arrive each day in the mail. And they offer such sweet deals. Go to a retailer and they will give you a 10% discount if you will sign up for a credit card and use it for your purchase. It is no wonder that a lot of people have large amounts of credit card debt. For some people the amount gets to be so large and difficult to pay that they begin to think of filing credit card bankruptcy. It sounds so simple, but is it?

First, there is no such thing as credit card bankruptcy. There are two types of personal bankruptcy – Chapter 7 bankruptcy and Chapter 13 bankruptcy. Whenever you file for either of these types of bankruptcy, you must list all of your debts – credit cards, mortgage, medical bills, car loans, etc. You cannot simply select which debts you want to list. By federal law, you must list all of your debts.

Next, there are generally two types of credit cards that consumers use. There are the standard, multi-purpose, multi-location type of cards. These are primarily the master card(tm) and visa(tm) type of credit cards. The second type are the store credit cards which are designed to be used only in a specific company’s stores. A good example of this is a Sears credit card.

There are also two types of debt – unsecured and secured. Most of the time when the multi-purpose, multi-location type of credit cards and store credit cards are used, they create unsecured debt. This means that you did not put anything up as collateral for the credit card loan with which you make the purchase. However, with some store credit cards, when you purchase durable goods, such as appliances, jewelry, etc., the store will retain a security interest in the items that you purchased. This means that if you do not pay the credit card debt for the item, the store can seek repossession of the items that you purchased.

If your credit card debt is primarily from the multi-purpose, multi-location type of credit cards and is unsecured debt, then filing bankruptcy under Chapter 7 may be your best bet because it will discharge unsecured debt. Of course, you must consider all factors because you could lose property in a Chapter 7.

If your credit card debt is primarily from the store type of credit card where the store retains a security interest in the items purchased, you can try filing bankruptcy under Chapter 13. Depending on a number of factors, you may be able to pay for the value of the items instead of the original price of the items.

It is important to remember that when you file bankruptcy, you file against all of your creditors, not just against credit cards. It is also important to remember that personal bankruptcy has disadvantages such as possibly losing property and long term negative affects on your credit. Filing bankruptcy should not be taken lightly. Consider all factors and not just your credit card debt.

This is general information. If you need specific information or have any questions of any nature whatsoever, talk with a lawyer licensed in your state.

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Claiming maximum benefits under Chapter 7 & 13, for low cost, is easier than you now think. Find out how the pros use their options wisely and beat creditors at their own game.

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