David M. Siegel answers in 23 seconds. Watch on YouTube · Read the transcript.
Short answer: Yes, and it is the most common debt we discharge. Credit card balances are unsecured — nothing is pledged against them — which makes them among the easiest debts to eliminate in a Chapter 7. Most cases are done in about four months.
Why credit cards discharge so cleanly
A credit card is unsecured debt. Nothing is pledged against it, so there is no property for the issuer to take back. When the discharge is entered, the balance is legally uncollectible — the issuer cannot sue you, garnish you, or call you about it again.
That is different from a car loan or a mortgage, where the lender holds an interest in something you own and the analysis is more involved. With credit cards there is nothing to negotiate around.
The math that traps people
Minimum payments on a card at twenty-nine percent are structured so that most of what you send goes to interest. People make those payments faithfully for years and watch the balance barely move, which is its own kind of demoralizing.
That is the moment worth doing arithmetic on. If the balance has not meaningfully dropped in two years of paying, it is not going to drop in the next two either. A discharge ends it in about four months.
What happens to the cards themselves
Every card gets listed, including any with a zero balance, and the accounts almost always close. Issuers subscribe to services that notify them of filings, so they find out whether or not you tell them.
Losing the cards sounds worse than it is. Most people arrive here already at their limits, and a card you cannot use is not really available credit. Your debit card is unaffected, and secured cards are available within months of the discharge.
Cards that are not really credit card debt
A store card that financed furniture or jewelry may be secured by the item itself, which changes the treatment. Balance transfers or cash advances taken shortly before filing can be scrutinized. Debt for a business you personally guaranteed follows different rules.
None of these are common obstacles, but they are worth mentioning at the consultation rather than discovering them later.
Ready to find out what a discharge would cover?
The consultation is free and there is no obligation. You will find out what you qualify for, which debts can be eliminated, what it costs, and what the payment plan looks like.
Wheeling: (847) 520-8100 Chicago: (773) 276-6969
Your case is handled by phone — you do not need to come into either office. Even the meeting of creditors is held on Zoom. We represent clients across the Northern District of Illinois: Cook, DuPage, Grundy, Kane, Kendall, Lake, LaSalle and Will counties.
Full transcript of the video
can bankruptcy eliminate credit card debt yes that’s one of the main culprits of bankruptcy credit card debt medical debt personal loans past due utilities auto repossession deficiencies home foreclosure deficiencies those are all things that could be covered under a Chapter 7 bankruptcy and credit card debt is probably the most common debt that I see on a day to day basis
Related questions
About the author. David M. Siegel has represented consumer bankruptcy clients in the Northern District of Illinois since 1991 and is the author of several books on consumer bankruptcy. The firm has offices at 790 Chaddick Drive, Wheeling, IL 60090 and 10540 S. Western Ave, Suite 202, Chicago, IL 60643, and handles cases by phone for clients throughout the Chicago area.
This article is general information about Illinois and federal bankruptcy law. It is not legal advice, and reading it does not create an attorney-client relationship. Every case turns on its own facts — speak with an attorney about yours.