Chapter 13 and Credit Card Debt

According to the U.S. Census Bureau, more than 70% of American households have a credit card. Of those households, 60% do not have the means to pay off their balance each month, per the Federal Reserve. Delinquent credit card payments can result in skyrocketing interest rates and calls from debt collectors.

Thankfully, debtors are granted the chance to pay down their credit card debt and possibly have it discharged through Chapter 13 bankruptcy. It’s advised you speak with a bankruptcy attorney if you need help deciding if Chapter 13 bankruptcy is right for your situation. 

Bankruptcy Lawyer in Dallas County

Do not rely on the internet to provide you with the knowledge you need to find credit card debt relief. Linda Littlefield has nearly 25 years of experience assisting consumers and small businesses with Chapter 13 bankruptcy. She will answer any questions you have and help you decide if Chapter 13 bankruptcy is the best course of action.

Take advantage of our free consultations. Call (972) 812-0900 to schedule a time to speak with Ms. Littlefield. We assist clients in Dallas County, Collin County, Kaufman County and Rockwall County.

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Will Credit Card Debt be Discharged?

One of the many reasons a debtor files for Chapter 13 bankruptcy is to get back on top of credit card bills. Over three to five years, a debtor will make reduced monthly payments on their debts. Once this time has expired, a debtor will then be relieved of their remaining unsecured debts, such as credit card bills.

While most credit card debts are unsecured, meaning there are no liens attached to property, there are rare situations where such debt is secured by collateral. This debt may still be discharged, but the credit card company will still be entitled to the collateral property.

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Exceptions to Credit Card Debt Discharge   

Most credit card debt will be wiped out at the end of a Chapter 13 repayment plan. However, creditors can object to the discharge in bankruptcy court. The remaining credit card debt may not be discharged if the court grants the request, and you will still be required to make monthly payments.

A credit card company must have a valid reason for the objection. Common reasons a credit card debt may not be discharged include:

  • The credit card was obtained through fraud
  • $750 or more of luxury services or goods were purchased on credit within 70 days of filing
  • $1,000 or more of cash advances or loans were taken within 90 days of filing
  • The debt was the result of malicious behavior
  • The debt was the result of embezzlement, larceny or breach of trust

A bankruptcy trustee also has the authority to object discharge. This objection is common if fraud was committed in connection with the bankruptcy case. Common reasons a trustee may object the discharge include:

  • Destroying documents or property related to the case
  • Failing to obey orders of the bankruptcy court
  • Providing false information on bankruptcy forms and schedules
  • Failing to complete the mandatory debtor education course

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Signs Credit Card Debt Has Become Too Much

You may feel there is no way out when credit card bills begin to pile up. Maybe you are being hounded by debt collectors or having a difficult time coming up with the money to make payments. There comes a time when collection calls and piling debt becomes too much that you start to consider Chapter 13 bankruptcy. 

Deciding to file for Chapter 13 bankruptcy is not easy, but if debt collectors are constantly harassing you, it may be time to consider the option. Listed below are signs it may be time to speak with an attorney about filing for Chapter 13 bankruptcy: 

  • You are getting demanding calls from debt collectors
  • Your credit cards are maxed out
  • You don’t qualify for a debt management plan
  • You cannot afford to pay back your debts
  • Creditors are threatening to take legal action
  • Your wages are being garnished
  • Your turning to loans to pay off debts 

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Additional Resources

Chapter 13 Bankruptcy Basics | United States Courts – Learn more about Chapter 13 bankruptcy by following the link. You can learn about the advantages of the legal process, who is eligible and find out how the process works. The information can be read on the official website of the United States Courts. 

Chapter 13 | Bankruptcy Code – Follow the link provided to read the section of the Bankruptcy Code governing Chapter 13 bankruptcy. You can gain access to information about the repayment plan, your rights and powers as a debtor and the role of a trustee. The statute can be read on the Legal Information Institute, an online legal resource provided by Cornell Law School.

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Bankruptcy Lawyer in Dallas   

Are you overwhelmed with credit card debt? Has the burden become too much you are considered bankruptcy? Linda Littlefield is a proven bankruptcy attorney who will strive to achieve the financial peace you deserve. Littlefield Law Firm understands you are in a financial bind, which is why we provide quality legal representation that fits your budget. 

Call (972) 812-0900 to schedule a time to speak with Ms. Littlefield. Littlefield Law Firm assists clients with bankruptcy and related issues in areas such as Dallas, Plano, Talty and Rockwall.

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