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Bankruptcy and Credit Card Debt Law

Individuals faced with credit card debt that they are unable to pay, often find themselves thinking about bankruptcy -- often not knowing if bankruptcy will help their situation or how it will affect their credit. This can lead to questions like the ones answered below.

What kind of documentation would I need from my credit card company when a verbal agreement was made to settle the credit card debt for less than the balance owed? How will this show up on my credit report?

You can find simple settlement agreement forms online. You would simply fill out such an agreement and outline what the terms of the agreement are. Make sure that you have the agreement signed before sending any money. You can add a provision that states the account will be removed from your credit report. Once the agreement is in place you can send the credit card company the money directly. Getting an agreement and having it signed is the best thing to do to ensure that you are ending the matter with the payment of the agreed sum.

I have a large amount of credit card debt and I am having trouble making my monthly payments. I have tried debt services and refinancing my mortgage to no avail because my credit score is too low. What are my options as far as credit card debt and bankruptcy goes?

There are two types of bankruptcy available for individuals, a Chapter 7 and a Chapter 13. You may want to consider a Chapter 7 Bankruptcy. In a Chapter 7 Bankruptcy all of your unsecured debt (medical bills, credit card debt, judgments and personal loans) could be discharged or erased. It essentially gives you a fresh financial start. A Chapter 7 would require that you surrender assets that exceed your exemption. If you do not have any nonexempt assets then you will lose only your debts.

A Chapter 13 bankruptcy is a repayment plan. It may require that you repay some of your unsecured credit card debt over a 3-5 year span. With a Chapter 13 bankruptcy you may keep assets that exceed your exemption.

Both Chapter 7 and Chapter 13 bankruptcies would be a negative mark on your credit. Most cases people have found that they can obtain a new mortgage 2 years after bankruptcy.

Would a credit card company have to notify me before they put a lien on my property, freeze my bank account or seize any assets or money?

In most states the credit card company would need to sue you in court then obtain a judgment. Only when they have the judgment could they then place a lien on your property. They could convert the judgment into a lien on your assets. But if you have been sued, you would have received a notice. As far as wage garnishment goes, most states require a notice to be given to the individual that states the garnishment is going to take place.

My fiancée put me on his credit card. This card came up on my credit report. I am filing bankruptcy and this card is being included in the bankruptcy. The credit card debt is current. Will my fiancée be affected by my bankruptcy? Will his credit card debt be erased?

If you are filing bankruptcy then your personal liability on the credit card debt will be discharged in your bankruptcy. Since your fiancée is not filing bankruptcy, he will continue to owe his credit card debt. Your bankruptcy should not affect your fiancée’s credit in any way. He still should be able to use that credit card.

If a credit card company files a judgment for unpaid credit card debt, and they are awarded judgment, can I file bankruptcy to wipe out the judgment?

Bankruptcy can discharge credit card debt, including those that have gone to judgment. Once you file your bankruptcy petition, the creditor collection must stop, including garnishments. Your bankruptcy attorney would send the notice of filing to the creditor’s attorney and the court will mail notice to all creditors on the schedule.

Having the right information and understanding credit card debt can help when dealing with questions regarding bankruptcy and credit cards. Experts can help answer questions about credit card debt law or what happens to credit card debt after bankruptcy. Get the answers fast and affordably by asking an Expert when you are not sure about laws governing credit card debts and bankruptcy.
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