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Bankruptcy provides an effective way to manage excessive debt for those in need of a fresh start. Credit card debt has unfortunately become a leading factor in consumer debt. Filing for bankruptcy may provide a solution. Collection efforts are paused and financial obligations are usually discharged. When a debtor files for Chapter 7 or Chapter 13 bankruptcy, their credit card debt is typically included in a discharge. At the Bankruptcy Center of Illinois, our dedicated DuPage County collections and credit attorneys understand that an experienced and approachable attorney can make the difference in your bankruptcy matter. If you are facing overwhelming credit card debt, we can provide straightforward solutions and guide you throughout the process of getting the relief you deserve.
Credit card debt is typically categorized as an unsecured claim. An unsecured claim is a claim that is not secured by collateral. One way to think of debt is that a secured creditor may be able to take the property if the bill is not paid. Unsecured creditors cannot.
As a type of creditor, credit card companies are deemed unsecured creditors. Creditor’s rights vary depending on whether they have secured and priority claims. There are priority unsecured claims and non-priority unsecured claims. A credit card lender is not capable of taking back the shoes or the pet supplies purchased with the credit card if a borrower cannot meet their monthly payment. Credit card debts have the lowest priority, if the debts are unsecured.
The amount the credit card company will be paid depends on different factors. Exemptions can make a difference, for instance. In the situation in which you are capable of paying more than secured and priority debts, then you will be required to pay credit card companies. Chapter 7 bankruptcy cases involve a trustee determining whether unsecured creditors will be repaid. Again, this assumes there are assets to cover the secured as well as unsecured claims. The trustee is tasked with ensuring that creditors are repaid. They accomplish this by liquidating your nonexempt assets. If there are no assets, as is common in Chapter 7 bankruptcy cases, then there is no property to be liquidated in order to pay creditors.
When a debtor files for Chapter 13 bankruptcy, a repayment plan is confirmed if it makes clear how creditors will be repaid over a period of time. Creditors receive payment according to their priority, but not every creditor will be repaid. A plan is required to cover repayment for secured creditors as well as priority unsecured debts. These may include child support or taxes.
There are certain types of credit card debt that are nondischargeable. If the debtor incurred debt using false pretenses or misrepresentation, this type of debt will not be discharged. An example includes someone who files for bankruptcy and then within a short period of time purchases hundreds of dollars of luxury items with their credit card. A luxury item is deemed something more than what is necessary for supporting yourself or your dependents.
A credit card company that intends to challenge a bankruptcy discharge must file a complaint. This complaint will be filed within the bankruptcy court where the debtor originally filed for bankruptcy. A credit card company has 60 days from the first meeting of creditors to file a complaint. An answer is required within a specific deadline, and in some cases, the court holds a hearing to determine the dischargeability of the debt.
If you are facing financial pressure, our credit card debt lawyers can help you resolve your debt. We represent people throughout DuPage County, as well as the areas of Lake County, including Highland Park, North Chicago, and Waukegan. Call our office at (773) 993-0024 or reach us online to learn more about how we can assist in your case. Our dedication to our clients is reflected in our successful bankruptcy outcomes.