November 30, 2023

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Filing Bankruptcy for Credit Card Debt: Understanding the Process

Bankruptcy is a legal process that allows individuals and businesses to eliminate or repay their debts under the protection of the bankruptcy court. Bankruptcy can be a powerful tool for those who are struggling with overwhelming debt, including credit card debt.

In this article, we will discuss the basics of filing for bankruptcy for credit card debt, including the different types of bankruptcy, the process of filing, and what to expect after filing.


Types of Bankruptcy

There are two main types of bankruptcy that individuals and businesses can file for:

1. Chapter 7 Bankruptcy

Chapter 7 bankruptcy, also known as “liquidation” bankruptcy, is the most common form of bankruptcy for individuals. In Chapter 7, a debtor’s non-exempt assets are sold to pay off creditors, and any remaining unsecured debts (such as credit card debt) are discharged.

To be eligible for Chapter 7 bankruptcy, a debtor must pass the means test, which compares their income to the median income in their state. If their income is below the state median, they are eligible to file for Chapter 7. If their income is above the state median, they may still be eligible to file for Chapter 7, but they will need to pass a more complex means test.

Chapter 7 bankruptcy typically takes between three and six months to complete, and debtors can begin to rebuild their credit soon after their debts are discharged.

2. Chapter 13 Bankruptcy

Chapter 13 bankruptcy, also known as “reorganization” bankruptcy, is a form of bankruptcy that allows debtors to repay all or a portion of their debts over a period of three to five years. In Chapter 13, the debtor creates a repayment plan that is approved by the bankruptcy court, and they make monthly payments to a bankruptcy trustee, who distributes the funds to creditors.

To be eligible for Chapter 13 bankruptcy, a debtor must have regular income and owe less than $419,275 in unsecured debt and less than $1,257,850 in secured debt.

Chapter 13 bankruptcy can be a good option for debtors who want to keep their assets (such as a house or car) and are willing and able to make regular payments to repay their debts. Chapter 13 bankruptcy also allows debtors to catch up on missed mortgage or car payments, which can help them avoid foreclosure or repossession.

Filing for Bankruptcy for Credit Card Debt

If you are considering filing for bankruptcy for credit card debt, the first step is to consult with a bankruptcy attorney. An attorney can help you determine which type of bankruptcy is right for you and guide you through the filing process.

1. Gather Necessary Documents

To file for bankruptcy, you will need to gather certain documents and information, including:

– Tax returns for the past two years
– Pay stubs or documentation of income for the past six months
– Bank statements for the past six months
– A list of all creditors and the amounts owed
– A list of all assets and their current value
– Any lawsuits or judgments against you

2. Complete Credit Counseling

Before you can file for bankruptcy, you must complete credit counseling with an approved agency. Credit counseling is designed to help debtors evaluate their finances and explore options for repaying their debts, including bankruptcy.

3. File Bankruptcy Petition

Once you have completed credit counseling, you can file a bankruptcy petition with the bankruptcy court. The petition includes your personal information, a list of your assets and debts, and a statement of your financial affairs.

4. Attend Meeting of Creditors

After you file your bankruptcy petition, you will be required to attend a meeting of creditors, also known as a 341 hearing. At the meeting, the bankruptcy trustee and your creditors will have an opportunity to ask you questions about your finances and your bankruptcy case.

5. Complete Bankruptcy Course

After the meeting of creditors, you must complete a second course in personal financial management. This course is designed to help you learn how to manage your finances and avoid future financial problems.

6. Receive Discharge

Once you have completed all the requirements of your bankruptcy case, you will receive a discharge. A discharge means that your debts have been eliminated (in Chapter 7) or that you have successfully completed your repayment plan (in Chapter 13).


1. Will filing bankruptcy for credit card debt affect my credit score?

Yes, filing bankruptcy will negatively impact your credit score. However, if you are struggling to make your credit card payments and your debts are affecting other areas of your life, bankruptcy may be the best option for you.

2. Will I have to give up my assets if I file for bankruptcy?

It depends on the type of bankruptcy you file for and the exemptions available in your state. In Chapter 7 bankruptcy, you may be required to sell non-exempt assets to pay off creditors. In Chapter 13 bankruptcy, you can keep your assets as long as you can make your monthly payments under your repayment plan.

3. Can I file bankruptcy for credit card debt and keep my house?

If you are current on your mortgage payments and have equity in your home that is covered by your state’s homestead exemption, you can generally keep your house in both Chapter 7 and Chapter 13 bankruptcy.

4. Will all my debts be discharged in bankruptcy?

No, not all debts are eligible for discharge in bankruptcy. Certain debts, such as student loans and most tax debts, cannot be eliminated in bankruptcy. However, credit card debt and other unsecured debts are generally dischargeable in bankruptcy.


Filing bankruptcy for credit card debt can be a difficult decision, but it can also be a way to get a fresh start and regain control of your finances. If you are considering bankruptcy, it is important to consult with an experienced bankruptcy attorney and understand the different types of bankruptcy and the filing process. By taking these steps, you can make an informed decision and take the first step toward a brighter financial future.

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Article Summary:

Bankruptcy can be a solution for those with overwhelming credit card debt. There are two main types of bankruptcy; Chapter 7 and Chapter 13. Chapter 7, or “liquidation” bankruptcy, involves the debtor’s non-exempt assets being sold to pay off creditors, with any remaining unsecured debts discharged. Chapter 13, or “reorganization” bankruptcy, allows debtors to repay all or a portion of their debts over a period of three to five years. Prior to filing for bankruptcy, debtors must consult with a bankruptcy attorney, gather necessary documents, complete credit counseling, and file a bankruptcy petition. This process can provide a fresh financial start, but it does impact credit scores.

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