Most Americans have some form of debt, and in many cases, a person’s most significant debts will be the balances on credit cards. While these debts may be manageable, and a person may be able to make ongoing payments as they work to pay off the balances owed, there are some situations where paying off these debts may be difficult or impossible. In cases where a person or family is experiencing financial difficulties and struggling to make credit card payments while also paying other debts and covering regular expenses, they will want to determine their options for debt relief. 

Options for Paying Off, Reducing, or Eliminating Credit Card Debts

When a person owes large amounts of money to credit card companies and other creditors, they may be able to take steps to achieve financial stability by reducing their payments or eliminating debts altogether. Some options for doing so include:

• Effective payment strategies - By taking stock of their financial situation and determining whether they can reduce expenses, a person may be able to determine how to make affordable payments that will allow them to pay off what is owed. By making payments that are larger than the minimum amount owed each month, they can make a dent in the total balance and work toward eliminating their debts. However, this may not be an option for those who are already struggling financially or who have debts that are too large to pay off in this manner.

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There are many forms of debt that can affect a family’s financial situation, and credit card balances are one of the most common types of debt. A person who has fallen behind on credit card payments or who is struggling to pay all of their ongoing expenses may experience a number of problems, including harassment from creditors who are seeking repayment. Those who have extensive credit card debts that they are struggling to pay may be wondering whether filing for bankruptcy would be beneficial.

Discharging Credit Card Debts Through Bankruptcy

Bankruptcy allows a person to receive a fresh financial start by eliminating certain debts. Credit card debts can be discharged through bankruptcy, and the type of debt relief available will depend on a person’s financial resources, the assets they own, and whether they have any other debts that they will need to address.

Chapter 7 bankruptcy is often the preferred option for addressing credit card balances and other unsecured debts, since it will allow these debts to be eliminated relatively quickly and easily. However, a person will need to pass a means test to qualify for this type of bankruptcy, and they may also be required to turn over certain non-exempt assets during the bankruptcy process. 

The United States is a notoriously consumeristic society. Having good credit is a necessity to buy a home and a reliable vehicle. Credit must be built, often through the usage of credit cards and the ability to repay the credit card debt. Sometimes, however, we accumulate debt and get in too far over our heads. Other times, a major unforeseen life event occurs—one which we are unprepared to handle financially. When this happens, filing for bankruptcy may help struggling individuals and families. When considering bankruptcy, the first question on many minds is, “Will it get rid of all of my personal debts”?

Understanding Bankruptcy

Bankruptcy is a federally approved process through which an individual or a company can reduce their debt. Those who are authorized for the process may have debts written off or repaid under a new agreement. The method used depends directly on the type of bankruptcy approved. The most typical forms of the process are Chapter 11 for businesses or Chapter 7 or Chapter 13 for private consumers, although others are available under appropriate circumstances. These chapters refer to the specific section of the United States Bankruptcy Code that will apply in a given case. Meanwhile, while the process is underway, all collection activities related to your debts—including lawsuits and foreclosure proceedings must stop.

Will All Debts Be Cleared?

If you are wondering whether bankruptcy resets your credit, enabling you to begin as though the debt never occurred, the answer is “no.” Filing for bankruptcy allows those who meet eligibility requirements to rid themselves of some but not all debt. Financial obligations that do not typically qualify to be wiped clean are child support, alimony, taxes, student loans, and secured debt. Although they may not be totally discharged, some may be eligible for a restructured payment plan. Some of the most common discharged liabilities include: