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Chapter 7 and Credit Cards

What is the Effect of Chapter 7 on Credit Cards

Chapter 7 Bankruptcy and Credit Cards

Chapter 7 is the most common chapter of bankruptcy that is filed. The major benefit of filing chapter 7 bankrutcy is the discharge order that is received from the court which foreever precludes creditors from having the ability to collect from you.

The chapter 7 discharge wipes the slate clean of general unsecured debt. This is the type of debt that does not have any security. This is also the type of debt that is not considered a priority, like certain tax debt, domestic support obligations, and certain fines in penalties from a criminal case, just to name a few. Credit cards are unsecured debt. They do no have any security. They for example, are not secured by a car, house or any other physical object. They are only evidenced by a promisorry note that the card holder enters into when they agree to the terms of the credit card company or bank that is extending them credit. It is for this reason, that when a chapter 7 discharge is ordered by the bankrutpcy court, it applies to the credit card debt listed on the debtor's bankruptcy petition.

If you are considering filing for bankruptcy protection and have credit left that you may charge on your credit cards, it is probably not a good idea to charge anything once you have decided to file for bankruptcy. If you have made recent credit card transactions before filing a chapter 7 case, there could be a presumption of abuse, which would make the card you made recent charges on not dischargable. If you are considering bankruptcy and have made recent charges, be sure to get an attorney who can give you competent advice about recent credit card transactions and bankruptcy.

If you successfully obtain a discharge in a chapter 7 bankruptcy case and have not failed to list your credit cards as debt, they will forever be discharged and wiped clean. If you have any questions about chapter 7 bankruptcy, please do not hesitate to contat us and schedule a free consultation with one of our attorneys. We have offices in Tempe and Mesa Arizona. Our number is 480-355-1377