Credit card debt is the most common type of unsecured debt eliminated in bankruptcy. Here is how it works for Minneapolis residents filing in the District of Minnesota.
Yes. Credit card debt is general unsecured debt -- the kind bankruptcy is specifically designed to address. In Chapter 7, most credit card balances are completely eliminated through discharge. In Chapter 13, you pay a percentage of your unsecured debt through your 3-5 year repayment plan, and the remaining balance is discharged.
Under 11 U.S.C. section 523(a)(2), credit card debt may be non-dischargeable if a creditor proves fraud:
These are presumptions that can be overcome with evidence. In practice, creditors rarely challenge small balances.
Minnesota is known for generous exemptions including a $450,000 homestead and broad personal property protections.
If creditors are suing you over credit card debt and threatening garnishment, filing bankruptcy triggers the automatic stay, which immediately stops all collection activity.
In most cases, yes. Credit card debt is fully dischargeable in Chapter 7. In Chapter 13, you pay a percentage through your plan and the rest is discharged. Exceptions exist for recent luxury purchases and cash advances.
Rarely. Most do not object unless there is evidence of fraud. For typical consumer debt, objections are uncommon.
Consult an attorney. Payments on debts that will be discharged are generally unnecessary, but stopping payments can trigger collection calls.
Many people receive offers within months of discharge. Secured credit cards are available almost immediately for rebuilding credit.
Chapter 7 stays on your report for 10 years, Chapter 13 for 7 years. Most filers see scores begin recovering within 1-2 years.
Use our free screener to check if prior filings affect your eligibility for a new bankruptcy discharge.
Free Discharge Screener How to File Guide