Filing for bankruptcy in Michigan is a decision you should make when you’re unable to pay back your debt through any other means. If you have extensive credit card debt and have exhausted all other efforts to pay it back, bankruptcy is your best option. You may wonder whether you should file Chapter 7 or Chapter 13.
Which type of bankruptcy is better when you have credit card debt?
When you have significant credit card debt, you may find that filing for bankruptcy is often your best bet at alleviating it. It’s important to understand the differences between Chapter 7 and Chapter 13 and how they related to credit card debt so that you know which one is better for you to file:
- Chapter 7: With Chapter 7 bankruptcy, most debts can be discharged. With this type of bankruptcy, you are required to give up all non-exempt property so that an appointed trustee can sell it and the money can go to your creditors to satisfy your debt. Because credit card debt is generally viewed as unsecured debt, it can be discharged through a Chapter 7 bankruptcy filing.
- Chapter 13: With credit card debt, you can also file for Chapter 13 bankruptcy. It allows you to pay back your creditors partially or even in full and allows for a special payment plan to make it easier for you to pay within three to five years. Through Chapter 13, some unsecured debt must be paid back, but it’s usually only a small percentage of your total. Once your repayment period ends, the remaining credit card balances are discharged.
Can you keep your credit card after bankruptcy?
You are allowed to keep your credit card after you’ve filed for bankruptcy. In most cases, you won’t have to worry about your credit account closing. You can also work toward rebuilding your credit, which is always a positive step forward.