Credit card debt is essentially an unsecured loan made by financial services companies. Although there may be situations in which you can negotiate better payment terms, or even a lower overall balance, the only way to completely remove your credit card debt is to file for Chapter 7 bankruptcy. In a Chapter 7 bankruptcy, your credit card debt is generally discharged, meaning you never have to pay it back. However, there are major ramifications of filing bankruptcy, including damage to your credit score.
Step 1
Research bankruptcy consequences. Although a Chapter 7 bankruptcy will most likely eliminate all of your credit card debt, it will appear on your credit report for 10 full years. During that time, it may be difficult if not impossible to get any kind of loan at a decent interest rate, or perhaps any loan at all. In addition, landlords, employers, even insurance companies may look at your credit report, and your bankruptcy may prevent you from renting an apartment or finding a decent job.
Step 2
Contact an attorney. Most attorneys offer a free bankruptcy consultation, so even if you think you want to file without a lawyer, talking over your situation with a professional may help. If nothing else, the attorney should be able to advise you as to whether filing Chapter 7 is a prudent move for you.
Step 3
Collect your financial records. You will need to document your financial affairs in extensive detail, including your income, expenses, assets, liabilities and spending patterns.
Step 4
Complete the voluntary bankruptcy petition. Bankruptcy varies from state to state, so you must complete the correct forms for your state. Usually, bankruptcy petitions run 40 pages or longer, and they must be completed thoroughly and accurately.
Step 5
File your petition with your local bankruptcy court. You can mail your petition to the court, but it is usually a good idea to hand-deliver the forms to the bankruptcy clerk, who can verify that you have attached all of the correct forms in the proper order.
Step 6
Attend your meeting of creditors. Also known as a 341 meeting, this is a meeting where the bankruptcy trustee reviews your paperwork and your creditors have a chance to ask you questions.
Step 7
Await your discharge. If you have properly completed your petition, the trustee is satisfied with your filing, and none of your creditors object, you will receive a complete discharge of your credit card debt within about 60 days after your 341 meeting.
Things You'll Need
- Credit card debt
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