Wipe Out Credit Card Debt
Credit card debt is easily eliminated in bankruptcy cases. It does not matter if you are still making payments on the credit cards, if they are seriously delinquent or even if you are in the middle of being garnished for a credit card, the debt can be discharged or wiped out in a bankruptcy. If you find yourself living on credit cards just so you have the money to make minimum payments on other cards, the writing is on the wall. You are insolvent and will probably file a bankruptcy at some point unless something changes quickly.
In most Chapter 7 cases, the entire credit card debt is just discharged or cancelled in the process. In a Chapter 13, late charges and interest are capped and you pay anywhere from 0% to 100% of the credit card debt in a repayment plan.
Of course, you will not have access to credit cards after you file your case. You can not choose to keep one card outside the bankruptcy for use. You have to include all the credit cards in the case. You will be able to use a bank debit card after you file. Eventually you will be able to obtain new credit cards after a bankruptcy once your credit is re-established.
If you make fraudulent purchases on credit cards, the credit card company could force you to pay these charges back in bankruptcy. Basically, they have to prove that you made charges knowing you were about to file a bankruptcy. This case is hard to prove. The court will look at the totality of the circumstances around the charges – how much they were, whether they were for luxuries or cash advances, whether you got advice from a bankruptcy attorney, whether you were making payments on the cards after you made a charge and whether you had any chance of payment the charges back to name a few circumstances. Because the lawsuit involved in proving fraud can be expensive, creditors rarely sue for minor charges made just before filing.