Can I Get Out of Credit Card Debt In New York Bankruptcy?

by Michael H. Schwartz
Man is filing for bankruptcy due to credit card debt.

Overwhelming credit card debt is one of the most common reasons people file for bankruptcy. However, bankruptcy can be a complicated process, depending on the assets you have, how much debt you’ve accumulated, and other circumstances. Although bankruptcy most likely can help if you’re drowning in credit card debt, there are still rules that apply and careful procedures that must be followed.

If you’re considering filing bankruptcy in New York to eliminate or settle your credit card debts, the law office of Michael H. Schwartz, P.C., is here to help. To learn more about your options for getting out of credit card debt, call us today or contact us online.

Why Is Bankruptcy a Good Choice to Eliminate Debt?

If you feel like you are only getting further and further behind in your debt, bankruptcy can give you a fresh start. If you meet the conditions to qualify for bankruptcy, the process can even eliminate your debts without you needing to give up valuable property like your home or your car. However, there are rules for qualifying for bankruptcy, so be sure to speak with our knowledgeable bankruptcy lawyer in New York before making any decisions.

What Forms of Bankruptcy Help are available for Credit Card Debt?

There are two common forms of bankruptcy when it comes to settling credit card debt: Chapter 7 bankruptcy and Chapter 13 bankruptcy. (The names are actual chapters in “Title 11” of the United States Code written by Congress for Bankruptcy Protection).

Chapter 7 bankruptcy is the more common type of bankruptcy filing. If you qualify for Chapter 7 bankruptcy, most of your debts are quickly discharged, and you no longer have to pay them back. There are some debts that cannot be discharged under a Chapter 7 bankruptcy filing. These include alimony, child support, some taxes, student loans, some loans or other debts backed by government agencies, etc. Our bankruptcy attorney can go over your finances in more detail and tell you which debts are eligible to be discharged under Chapter 7.

Chapter 13 bankruptcy proceedings are slightly different because they typically involve households with significant assets. A Chapter 13 bankruptcy filing restructures your debts to give you a chance to fully or partially repay your creditors. Chapter 13 is primarily used to stop foreclosures and give you a chance to repay the money owed.

If I Decide to File for Bankruptcy, What Do I Have to Do Beforehand?

There are some essential steps you’ll need to take to prepare for your bankruptcy filing:

  • Gather your important financial documents. This includes bills, loan statements, mortgage statements, proof of income, etc.
  • Stop using your credit cards. You’re accumulating extra debt, and if you spend your credit cards on anything other than necessities, you’re opening yourself up to legal action from your creditors.
  • Take a credit counseling course. You should wait until your case is ready to be filed as the certificate of completion of the course has an expiration date.
  • Consider opening a new bank account, especially if you do your banking with one of your creditors. They may shut down your account until the bankruptcy proceedings are complete.
  • Leave any major assets or property as they are. Transferring your home, car, or other assets to another person, even if you did so with no malicious intent, could be seen as an attempt at fraud and land you in serious legal jeopardy.
  • Hire a bankruptcy lawyer. Don’t go it alone. It is a complicated process requiring over 50 pages of documents to be filed with the Federal Government,  and any mistakes are held against you.  An attorney will make the process faster and less painful. You will also have the peace of mind of referring all calls or other communication from your creditors to your lawyer.

How Long Does a Bankruptcy Stay on a Person’s Credit Report?

How long a bankruptcy will be a part of your credit report depends on which type of bankruptcy filing you choose. Chapter 7 bankruptcies stay on your credit report for ten years, in part because most debts are discharged in these cases. Chapter 13 bankruptcies stay on your credit for seven years, as Chapter 13 bankruptcy requires at least partial repayment of your debts.

Can I Have a Credit Card Again After Filing for Bankruptcy?

Your credit card options may be limited after filing for bankruptcy. However, in the past few years, creditors have been eager to issue more credit cards after bankruptcy because your credit card purchases are actually promises to pay money with interest that are sold as assets to companies on Wall Street, resulting in more profit for the credit card issuers.

Call our office or contact us online to get started on your fresh start.

Filing for bankruptcy isn’t an easy decision. It carries both potential risks and rewards. It’s a decision that can dramatically impact your credit and your finances. So before you make any decision, speak with a New York bankruptcy lawyer. The team at the law office of Michael H. Schwartz, P.C., can advise you of your options and help you decide on the best strategy for you.

Michael H. Schwartz is the largest filer of bankruptcy cases for people living in Westchester and Rockland counties in New York. A graduate of New York Law School, Michael has been licensed to practice in New York State courts since 1983. He is also licensed to practice in the U.S. Bankruptcy and District Courts for the Southern, Eastern and Northern Districts of New York and the District of New Jersey as well as the Second Circuit U.S. Court of Appeals. He is a graduate of Max Gardner’s Bankruptcy and Veterans’ Boot Camps. Several media outlets have reported on his cases or sought his insights, including The New York Times.