It isn’t uncommon to use credit cards to pay for groceries, gas or other daily expenses. However, if you are unable to pay your credit card balances each month, your debt can quickly spiral out of control. Depending on the amount of debt that you have, it may be necessary to submit a bankruptcy petition to a California judge.
How can bankruptcy help you obtain debt relief?
Credit card balances are generally classified as a form of unsecured debt. This means that the lender relies on nothing more than your promise to pay what you owe on time each month. In most cases, unsecured debts can be fully discharged in Chapter 7.
When are credit card debts not eligible for a discharge?
It’s worth noting that credit card balances generally cannot be discharged if they are used to pay a priority debt. For example, if you pay for school with a credit card, that balance becomes a priority balance. The same may be true if you paid your income taxes with a card as opposed to by cash or check. Child support payments are also considered to be a priority debt, however, it’s unlikely that you would be able to make such a payment with anything other than cash.
Is bankruptcy your only option?
Ideally, bankruptcy will be a last resort that you turn to after exhausting all other possible strategies for obtaining debt relief. Other strategies may include a balance transfer, paying off your debt with a personal loan that has a lower interest rate or asking your creditors to forgive a portion of your outstanding balances.
Filing for protection from creditors may make it possible to obtain the relief that you need even if your balances aren’t eliminated in full. When you file, you are granted an automatic stay, which puts a stop to creditor collection activities. This stay may give you the time and leverage needed to work out a payment plan that meets your needs and fits within your budget.