When an individual decides to file for bankruptcy and goes through the entire process, some or all of their credit card debt could be wiped away. The chances of having credit card debt wiped away depends on the type of bankruptcy a person chooses to file for as well as how much debt the individual accrued. Because Chapter 7 bankruptcy and Chapter 13 bankruptcy tend to be the most common forms of bankruptcy people file for, below is an explanation of what could happen to credit card debt when an individual files for either type.
What happens to credit card debt when filing for Chapter 7 bankruptcy in Tulsa?
When an individual chooses to file for Chapter 7 bankruptcy, they allow a federal court trustee to supervise the sale of certain assets that can be used to pay back creditors. Generally, the trustee cannot sell vehicles, work-related tools, or basic household furnishings as these are usually exempt, according to Experian, although a filer could lose certain property. After all assets are sold, the money is then used to pay down the debt that is owed.
In the event there is still unpaid debt after creditors are paid what was earned from selling a person’s assets, the balance would be wiped away. This means that if an individual does not have enough assets to cover all of their credit card debt, the remaining balance would be eliminated after the bankruptcy is discharged. Now, it is important to note that although this can help an individual breathe a little easier as they no longer would have credit card companies chasing them for money, the bankruptcy will show up on their credit report and remain there for ten years after the filing date.
To learn more about the types of debt that can and cannot be discharged with a Chapter 7 bankruptcy, it’s best to contact a Tulsa, OK bankruptcy lawyer to discuss this.
Where does credit card debt go after filing for Chapter 13 bankruptcy?
When an individual chooses to file for Chapter 13 bankruptcy, they are permitted to keep their property, however, they will be required to repay their debt over a three-to-five-year period while following a repayment plan. Before a repayment plan is created, the bankruptcy court and a bankruptcy attorney, given one is hired, can negotiate what will be paid back. Once an individual completes their repayment plan, the remainder of the debt, if any is left, will be discharged. Therefore, if all of a person’s credit card debt was not paid off over the course of the repayment plan, any balance owed would be discharged.
Now, it is worth noting that certain types of debts cannot be discharged after bankruptcy. For example, child support, student loans, and court-ordered alimony are a few types of debt that generally must be paid back.
Learn More About Filing for Bankruptcy in Tulsa
Depending on the circumstances an individual is facing, bankruptcy might be a good option for them. To learn more about the requirements that must be met in order to file for bankruptcy and what the process entails, contact the Henson Law Firm, PLLC to speak with a Tulsa, OK bankruptcy lawyer. This bankruptcy law firm is available to address anyone’s questions or concerns they have related to filing for bankruptcy in Oklahoma.
The Henson Law Firm, PLLC is located at:
601 S. Boulder, Suite 600
Tulsa, OK 74119
*We are a debt relief law firm in Tulsa, Oklahoma.
*We help people file for bankruptcy relief under the Bankruptcy Code.