One of the most common reasons people turn to Chapter 7 bankruptcy is to find relief from credit card debt. If you owe money on your credit cards and are having a hard time repaying it, this could be the right solution for you. As you begin analyzing bankruptcy, it is vital to understand the effects Chapter 7 has on your credit cards and loans. Here are a few critical things to know.
Qualifying Debts Get a Discharge
The one thing most people want to know is what debts the case will discharge. A discharge is equivalent to the elimination of money owed. If the case discharges a debt, you no longer have to pay it. The debt is no longer your responsibility. Any debts that are qualifying will end up with a discharge, and almost all credit card balances fall into this category.
You Must List Every Creditor
A common question people ask when filing for Chapter 7 is whether they can keep a credit card during the process. The answer is no. You cannot keep any of your credit card accounts when filing. You are required to list each one, even those that have a zero balance. To find out what accounts you have, your lawyer will obtain a credit report. Your credit report should list every open account you have, and your lawyer will use this information when preparing your bankruptcy documents.
You Will Lose Your Credit Cards
When the creditors learn of your filing, they will close these accounts. In the future, you can get new credit card accounts, but they will not be the same accounts you had before filing for Chapter 7. You cannot decide to keep even one of the accounts you have. Keeping any of your current accounts is not an option with any branch of bankruptcy.
You Can Keep Secured Loans Through Reaffirmation Agreements
If you have loans for assets that you want to keep, there is a chance you can keep these loans along with the corresponding assets. For this to occur, your lawyer will submit reaffirmation statements to the lenders. If they sign them, it means they agree to let you keep the assets as long as you continue making your payments.
Having a good understanding of how Chapter 7 affects your credit cards and loans can help you make an informed decision about filing. You can get more information by meeting with a bankruptcy attorney.