What Happens to Your Credit Card Debt After Filing for Bankruptcy?

AHMEDABAD, India - April 4, 2024 - PRLog -- If you are facing bankruptcy, creditor calls due to unpaid credit card balances may be your source of stress and anxiety. Thankfully, a Katy bankruptcy lawyer can help you explore your bankruptcy options to clear all your credit card debts. Bankruptcy provides you with relief from unlimited collections efforts.

Seeking Relief from Credit Card Debt

As your credit card debts start to pile up, creditors can become aggressive and unforgiving. They may increase your interest rates, deny new credit card applications, charge hefty fees, and have a collection agency bugging you for payment.

Collection agencies can be ruthless in their collection efforts. They will give you a call at home and work. Also, they can send demand letters, try to repossess your vehicle, or even threaten to sue you. Such tactics can push you to find a way out of your credit card debt.

By declaring bankruptcy, you get relief from such debts. Unsecured debts like credit accounts do not get collateral as loan security. A successful bankruptcy petition can discharge most unsecured debt. But the process differs in the kind of bankruptcy you file.

Filing for Chapter 7 Bankruptcy

In Texas, you can file a Chapter 7 bankruptcy if your income is less than the state's median income. When you choose this option, you and your lawyer will list your credit card debt and other debts as of the petition date. Then, your petition and assets will be reviewed by a bankruptcy trustee. The trustee will liquidate all assets not covered by an exemption. Liquidation proceeds are then distributed to your creditors. The remaining credit card debt will be discharged. Click here for more information - https://www.coreymillslaw.com/

Filing for Chapter 13 Bankruptcy

If you make more than the median income, you may want to consider Chapter 13 bankruptcy. With a repayment plan, you consolidate your debts into monthly payments you need to make over 3-5 years. This is based on all your disposable income. You will make such payments to the trustee who distributes payments to creditors. Once the repayment period ends, all unpaid dischargeable debts are discharged.

What About Debts Handled by a Collection Agency?

Usually, you may only start bankruptcy after your debts have gone to collections. Thankfully, filing for bankruptcy can stop collection calls. Such a filing initiates an automatic stop on all collection efforts. Once the credit card providers know you have declared bankruptcy, they should approach the trustee to collect what you owe them.