Credit Card Charges in Bankruptcy

Bankruptcy and Credit Card Lawsuits

Bankruptcy has the ability to cease or delay legal action from lawsuits related to credit card debt . How the filing process provides a solution for the issue will likely depend on which chapter you file; whether it be Chapter 7 or Chapter 13.  For the most part, debtors may have debt related to the suit discharged or may be required to pay a portion of what is owed.

The Automatic Stay

When you file bankruptcy the automatic stay goes into effect. This is a legal action enforced by the bankruptcy code that prevents creditors from continuing collection attempts against the debtor while the case is open and remains active. Legal actions connected to a credit card lawsuit are stopped temporarily; meaning the credit card company is prohibited from carrying out legal action in any attempt to collect from you.

Credit Card Lawsuits and Chapter 7 Bankruptcy

The next step in the filing process depends on which chapter you file. In Chapter 7 bankruptcy , a lawsuit against you may get dismissed if debt related to claims outlined in the suit is dischargeable. This may be completed in a matter of months or when your case closes. If you receive a discharge you will no longer be responsible for the debt, so the lawsuit would get dismissed.

Credit Card Lawsuits and Chapter 13 Bankruptcy

If you file Chapter 13 bankruptcy you may be required to pay a portion of the debt through a court-approved repayment plan. The plan lasts between 3 and 5 years.  Any remaining unsecured debt, such as credit card debt, may get discharged at the end of the plan.  If you have claims of fraud associated with the lawsuit, the debt may not qualify for elimination.