Credit Card Debt

Filing a Chapter 7 bankruptcy — also known as a “straight bankruptcy” or “liquidation bankruptcy” — can allow you to walk away from and avoid paying many (if not most) of your unsecured, unmanageable debts, including outstanding credit card bills, even if the credit card company already sued you and obtained a judgment.

Upon successful completion of a Chapter 7 case (which usually takes three to four months), credit card debt and other unsecured debts such as medical bills, personal loans, and past-due utility payments are discharged. You can walk away from these bills and never worry about them again. No one is allowed to call you, contact you, or sue you — and if they try, you can sue them and collect money from them.

In fact, the minute you file your bankruptcy case, all of your creditors must immediately stop trying to collect from you, even if they don't yet know that you filed. Collection calls and threats must stop, and no one can sue you or continue a civil lawsuit against you. If a creditor ignores the bankruptcy stay, you can sue them and collect money.

This also means existing wage and bank garnishments must stop — and if a creditor garnished your wages or bank account within a short time before you filed your Chapter 7 petition, the creditor may have to return the money to you.

Another benefit: unlike a “debt settlement” or “debt negotiation,” where you settle for less than owed and then have to pay income tax on the “charged off” amount (after the creditor sends you a Form 1099), you cannot be charged income tax on credit card debt that was discharged in bankruptcy.

While a Chapter 7 isn't suitable for everyone, most people who file are able to keep all of their property and benefit from the fresh start that comes from legally shedding a mountain of debt.

If you live in the Metro Detroit area and want to get rid of credit card and other unsecured debts, call us today at 248-417-9800 or contact us online to set up a free, no-obligation, confidential consultation. Our phone lines are available 24 hours a day.

Pursuant to 11 U.S.C. § 528 we are required to state that we are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.