Saturday, November 12, 2011

Consumer Personal Bankruptcy and the Purpose of Credit Card Debt

In this challenging economy, many people are financially overextended and the initial things they quit making payments on are credit cards. Since credit cards are believed to be an unsecured loan, they are usually listed in bankruptcy filings. Additionally, since several consumers have a huge amount of consumer credit card debt, it is almost always involved in the choice to file for personal bankruptcy protection.

Credit card companies may be happy to work with consumers on cutting down their monthly installments or reducing the interest rate on the card, but typically they will want the money they are owed, leaving an individual feeling stressed by debt. That is not to say it is the credit card debt alone that is driving them to the verge of bankruptcy. Most often, those seeking personal bankruptcy relief also have an abundance of other debt. Though, in most instances the requirement for payments could possibly be the deciding aspect in your bankruptcy filing.

It can also sway the decision to file a Chapter 7 bankruptcy over the Chapter 13 filing. In Chapter 7, qualified debts are eradicated and with the unguaranteed status of unsecured credit card debt, other than losing card privileges and having it marked on your credit history, the competent debt will be removed.

With a Chapter 13 individual bankruptcy, the company will be paid back over the life of the individual bankruptcy ruling, and you will still lose the credit card privileges and the bankruptcy will be on your report. Chapter 13 requires you to make monthly obligations to a court trustee. In this instance, the court trustee will simply disperse the repayment to the creditors for you.

One issue that the personal bankruptcy court might use to refuse to discharge a credit card debt is if it is believed to have been elevated as a result of fraudulent activity. That is if you made several charges on the card of luxury items in anticipation of filing for personal bankruptcy, with no intention of paying for them.

The charge card company can resist the release of the debt and if proven the legal court can rule that you still must repay that loan, regardless of whether all other debts are deemed qualified and discharged. It's not very common however, and if you have a great bankruptcy attorney in Washington, they can help you if the situation does happen and you're not guilty of the accusation.

Prior to making any decisions regarding personal bankruptcy, be sure to chat with your bankruptcy attorney about options you've got or do not have. The bankruptcy lawyer will help you figure out whether you need to file for Chapter 7 Bankruptcy or Chapter 13 and can even help you with any type of bankruptcy forms you'll want to file.

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