What You Should Know About Credit Card Debt and Bankruptcy

Debtors in Illinois consider personal bankruptcy for many different reasons, including medical debt, student loan debt, credit card debt, and other types of debt. If you have a substantial amount of credit card debt and are thinking about the possibility of filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy in Oak Park, you should know that you are not alone. Credit card debt is a common form of debt that results in bankruptcy filings in Illinois and across the country, and it is routinely discharged in consumer bankruptcy cases. If you have credit card debt and are thinking about bankruptcy, the following are some of the key things you should know.

Consumers Owe Billions in Credit Card Debt

According to a recent study conducted by WalletHub, credit card debt in America is climbing. Indeed, “consumers added a total of $86.2 billion in new credit card debt to their tab during 2021, capped off by a $73.1 billion increase during the fourth quarter alone.” In the first quarter of 2022, credit card debt in the U.S. increased by an additional $13.2 billion. Then, many people who hold that credit card debt are paying it down at a significantly lower rate than their spending.

Credit Card Debt is Usually Dischargeable

Generally speaking, credit card debt is usually dischargeable in a consumer bankruptcy case under the U.S. Bankruptcy Code. Whether you are planning to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy in Illinois, you should be able to anticipate that your credit card debt will be eligible for discharge unless there are concerns about bankruptcy fraud, which we will discuss below.

Credit Card Charging Before Your Bankruptcy Case Could Look Like Fraud

When you are planning to file for personal bankruptcy in Illinois, it is important to avoid making any unnecessary charges on your credit card in the months leading up to your bankruptcy filing. There are two forms of fraud associated with credit card spending before a bankruptcy case: fraud and presumptive fraud.

When you make significant charges before filing for Chapter 7 bankruptcy with the intention of having the debt discharged—such as charges for services made on a vacation, or flights, or goods that may be classified as exempt—you could face bankruptcy fraud allegations. You can also face allegations of presumptive fraud if you make purchases totaling more than $800 from a single creditor within three months of your bankruptcy filing, or you take a cash advance of $1,100 or more within 70 days of your bankruptcy filing.

Contact a Bankruptcy Attorney in Oak Park, Illinois

Credit card debt is among the most common types of debt that leads consumers to file for Chapter 7 and Chapter 13 bankruptcy. Whether you have questions about discharging credit card debt in your consumer bankruptcy case or you have other inquiries or concerns about credit card debt in your bankruptcy filing, one of our experienced Oak Park bankruptcy lawyers can speak with you today about your circumstances. Contact the Emerson Law Firm to learn more about the bankruptcy and consumer protections services we provide to clients in Illinois.


See Related Blog Posts:

What Questions Should I Ask a Bankruptcy Lawyer?

Exceptions to Discharge: Five Things to Know

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