Bankruptcy & Credit Card Law
When you file a petition for bankruptcy there are certain laws that must be complied with concerning your credit card debt. There is no collateral pledged as security. Creditors must stop all contact with the debtor.
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Significance
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When you file for bankruptcy, credit card debt is discharged, which means it is not included in the bankruptcy estate. Discharged credit card debt does not have to be repaid when a chapter 7 bankruptcy has been filed.
Benefits
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Creditors must stop all collection activity, including phone calls, letters, and emails, once a bankruptcy has been filed. A creditor must also discontinue collecting on a judgment.
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Warning
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According to Lendingtree.com, the strict means test says if your income is greater than the median income for your state you are required to file a chapter 13 bankruptcy.
Chapter 13
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When a chapter 13 bankruptcy is filed you pay back a portion of your debt, including credit card debt. Your repayment plan is 36 to 60 months. The amount you repay will be a certain percentage of your outstanding debt.
Potential
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You can choose to sign a reaffirmation agreement, which means you have decided to repay the credit card debt with the same terms and conditions. Reaffirmation agreements apply to chapter 7 bankruptcies.
Considerations
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You need to include all of your credit card debt in your schedules. The schedules refer to paperwork that lists all of your assets and liabilities.
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