How is Credit Card Debt Handled in Chapter 13 Bankruptcy?

Credit Card Debt and Bankruptcy

Chapter 13 bankruptcy helps debtors reorganize their debt into manageable payments scheduled over a certain time period. When it comes to credit card debt , the amount you pay may vary depending on multiple factors. If you make necessary payments according to your plan you may qualify to have any remaining credit card debt discharged or eliminated when your Chapter 13 case ends.

Chapter 13 bankruptcy is a 3 to 5 year repayment plan that helps debtors maintain priority debts. Bankruptcy laws in Chapter 13 may vary but certain debt obligations have higher priorities than others. Credit card debt may not be considered a high priority debt but it can still be included in your repayment plan depending on your situation.

Bankruptcy regulations classify debt into different categories which help determine their priority status. Secured debt such as a mortgage or vehicle loan may be considered a priority debt since they are backed by collateral that can be taken from the debtor when payments default.  Certain unsecured debts have priority as well such as child or spousal support and back income taxes. These types of debts are non-dischargeable. Keep in mind that certain unsecured debts may need to be paid in full upon discharge.

Most credit card debt may not require full payment but this may vary if the credit card is a secured debt. Upon filing your Chapter 13 bankruptcy you’ll provide a list of all outstanding creditors and propose an amount you are willing to pay toward the debt. Usually, credit card debt payments are determined based on what is left over from paying priority debt.