On Credit Card Debt and Bankruptcy: How Does it Work?
As you find yourself drowning in a helpless pile of debts, the option to declare for bankruptcy comes close to mind. In fact, each year, about half of a million Americans declare bankruptcy. Unfortunate as it may sound, this is now how the modern world works.
Credit Card and Bankruptcy
As expected, one of the greatest reasons for bankruptcy declarations are debts concerning credit cards. With the pressure coming from debt collectors for credit card debts, many debtors are forced to declare themselves bankrupt as this might just be the easiest way to eliminate credit card debts.
Like most forms of debts, credit card debts can easily be eliminated by bankruptcy. However, when you do declare yourself bankrupt, it is a holistic approach. You cannot just file for bankruptcy for your credit card debts, all other debts from all other sources are required to be disclosed as well.
Still, there are several important things you need to know before filing for bankruptcy. These are the following:
Things to Know
- You need a list for every debt you owe any creditor.
When it comes to filing for bankruptcy, you cannot leave other debts out of it. All debts you have to any creditor must be disclosed; this is a legal requirement. And so, it’s not possible to file for bankruptcy with regards only to your credit card; it must include all other debts and creditors. Yes, even including the debt you incurred from your dentist months ago.
- Not all debts can be discharged by bankruptcy.
Unfortunately, not all debts can be discharged by bankruptcy. Debts like alimony, student loans, child support and taxes are some of the debts that can’t be eliminated. Furthermore, only unsecured debts can be discharged by bankruptcy. Secured credit card debts will allow creditors to take away whatever items you have purchased for nonpayment.
- A nondischargeability can be filed against you.
A fraudulent activity can be a source of nondischargeability and you can even be put to jail for it. If you used your credit card for luxury right after you discussed filing for bankruptcy with a lawyer; the court will view this as a sign of fraud. With that said, your debts will not be discharged.
- Your credit score will be affected by your bankruptcy.
With bankruptcy on your credit report, your credit scores will definitely sink. Those with credit scores that are around 700 will definitely lose around 200 points. This will then have a great impact in your accessibility to credit. It’s possible for you to not be eligible for some loans and credit cards or if you are, you might face sky-high interest rates and fees.
- You can remove bankruptcy from your credit report sooner.
As opposed to the idea that it will take 7 to 10 years before your name and credit part will be cleared for bankruptcy; there is actually a way to make this happen sooner. With the help of credit repair companies, disputing negative aspects of your credit reports will be made easier. To know more about this, check out http://aaacreditguide.com/bankruptcy-on-your-credit-report/.