Can Bankruptcy Clear Credit Card Debt?

When you find yourself in a mountain of debt, declaring bankruptcy may be your best, if not your only, course of action. We feel like it is extremely important to know how declaring bankruptcy will affect your debt and your future. Talking to an experienced bankruptcy attorney is something you need to do before you make the decision to declare bankruptcy. There are certain kinds of debt that can be discharged and other kinds that cannot.

The bankruptcy code does not list what is dischargeable and what is not, but it does list what debt is non-dischargeable. In general terms, the following are some of the debts that are most often dischargeable when a bankruptcy is filed:

  • utility bills
  • vehicle loans
  • vehicle leases
  • rent that hasn't been paid
  • debt in collections
  • medical bills
  • some tax debt
  • any outstanding judgments
  • payday loans
  • unsecured loans like credit cards

The kind of credit card debt that will not be discharged when filing a Chapter 7 bankruptcy is when you charge a vacation to your credit card and a month later file for bankruptcy, charge large-ticket items that you couldn't possibly afford to pay back, go on shopping sprees that aren't consistent with your spending prior to the spree, or any spending you do that may appear fraudulent.

Debts that are non-dischargeable when filing Chapter 7 are student loans, child support, alimony, some taxes, judgments involving accidents you caused while you were intoxicated, government fines and penalties, and some taxes. The debt you accumulated through larceny, embezzlement, while you were managing the assets for another person, association fees, condominium fees, injury to another that was willful or malicious, or any type of false or fraudulent, means that debt is not dischargeable. Any debtor that you didn't give enough time to file their proofs of claim would also fall in this category.

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