Filing Bankruptcy On Credit Cards Only

Filing Bankruptcy On Credit Cards Only

by Steve M. Bingman

A lot of people ask about filing bankruptcy on credit cards only. Unfortunately, people cannot do that.
When filing either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, people are required by law to list all of their debts, all of their property, and all of their income. Failure to disclose everything can be determined to be bankruptcy fraud.

People cannot choose which debts that they want to include in bankruptcy. It is illegal in bankruptcy to show favorites among creditors by paying one creditor and not paying another. All creditors holding the same status must be treated the same way.

While you cannot choose among creditors holding the same status, you can choose which type of bankruptcy to file, if you qualify. And by choosing which type of bankruptcy to file, you may be choosing which creditors will be paid.

A Chapter 7 bankruptcy is a liquidation bankruptcy. Property that is not exempt will be sold (if it will bring in more money than the debt which it secures) and the net proceeds distributed to creditors.

When a person has a lot of credit card debt and little property or property that is not worth much more that the debt it secures, the person may benefit by filing a Chapter 7 bankruptcy. Without going into details, it may be that the person's property is exempt or that the property does not have enough value to sell. The person could keep his property and still have the credit card debts discharged, meaning that the person does not have to pay them and the credit card company cannot bring an action to collect. One note: people must qualify for a Chapter 7 and not everyone qualifies.

When a person has a lot of credit card debt and property that is either paid for or which secures small debts in comparison to the value of the property, the person may want to consider a Chapter 13 bankruptcy. A Chapter 13 is a payment plan which normally lasts between 3 to 5 years.

Depending on a person's ability to pay, a creditor, such as a credit card company, may be paid in full or in part. In other words, a credit card company may receive pennies on the dollar.

The bottom line is that filing bankruptcy on credit cards only is not going to work unless credit cards are the only debt that a person has.

This is general information. If you need specific information or have any questions of any nature whatsoever, talk with a lawyer licensed in your state.

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