Wipe Out Your Credit Card Debts

Credit card debt is one of the more common challenges you might face in Olympia, Washington. If you are finding it harder and harder to manage your credit card payments, you should understand the impact this can have on your finances and how bankruptcy might offer you the solution you need.

A skilled Olympia bankruptcy attorney can help assess your current financial situation and fill you in on which type of bankruptcy might be right for you.

Credit card debt simply refers to the outstanding balances you have on your credit cards. It is money owed to your card issuer. When you carry balances from month to month, the interest charges begin accumulating.

These debts can then quickly grow, especially if you miss payments, incur late fees, or even continue charging purchases to your card.

Credit card debt can affect your finances in several different ways:

• Interest and Fees: Credit cards often have higher interest rates, which can lead to overwhelming fees if you can’t pay off balances quickly.
• Credit Score Damage: High balances and missed payments can damage your credit score and make it more difficult to qualify for loans or lower interest rates in the future.
• Stress and Anxiety: Debt can cause a lot of stress and can even affect your mental health and relationships.

In Olympia and the rest of Thurston County, credit card debt can also feel compounded by the higher cost of living. With rising healthcare and housing costs, you might find yourself relying on your credits even more for daily expenses, which can lead to more debt.

One option for addressing overwhelming credit card debt is filing for bankruptcy. Washington State has two primary forms of bankruptcy: Chapter 7 and Chapter 13.

Chapter 7 bankruptcy is designed to discharge most unsecured debts, including credit card debt. Here’s how it generally works:

• Eligibility: To qualify for Chapter 7, you must pass the means test (11 U.S.C. § 707)—a comparison of your income to the state's median income. If you earn below the median income in Washington State, you are likely eligible for Chapter 7.
• Discharge of Debt: Chapter 7 allows you to discharge most of your unsecured debt, including credit card balances. This means you’re no longer legally required to pay those debts.
• Asset Liquidation: In some cases, your non-exempt assets may be liquidated to pay creditors. However, Washington has generous exemptions that protect many of your assets from liquidation.

If you don’t qualify for Chapter 7 or have valuable assets you want to protect, Chapter 13 might be an option to consider. This involves a repayment plan (11 U.S.C. § 1322) that allows you to pay off your credit card debt over three to five years. This is good for:

• Debt Reduction: You can possibly reduce the amount of debt you owe on your credit cards.
• Protected Assets: You can keep your assets while you work through your repayment plan.
• Financial Reorganization: You turn your massive debt into manageable monthly payments.

When it comes to your credit card debt in Thurston County, some laws do affect your rights and obligations.

• Washington State limits how creditors can collect from you. RCW 19.16.500 governs debt collection practices, prohibiting harassment, false statements, and threats of violence.
• If you believe a creditor is violating these laws, you can report them to the Washington State Department of Financial Institutions (DFI).

• Creditors have a limited period to sue you for unpaid credit card debt. The statute of limitations for credit card debt (RCW 4.16.040) in Washington is six years.
• After this time, the debt is considered “time-barred,” meaning creditors can’t sue you for the debt, though they can still attempt to collect it through other means.

Your Olympia bankruptcy attorney can provide essential guidance when you are overwhelmed by your mounting credit card debt. They can help you understand your options, negotiate with creditors on your behalf, and streamline the process.

A skilled attorney also streamlines the process, prevents costly mistakes from derailing your case, and can maximize your debt relief as much as possible so you can get on solid footing with your financial future.

Credit card debts are among the easiest to wipe out in a bankruptcy. It doesn’t matter if you are current on your payments or things have gotten so bad that you are being garnished for a credit card debt. Filing a bankruptcy immediately stops a credit card company from making nasty collection calls, filing a law suit or garnishment. If you are making payments on credit cards and have decided that you want to file bankruptcy for sure, you might as well stop making the payments because bankruptcy discharges interest and late fees. You can not pick and choose which credit cards to discharge and which to keep. You must include all your credit cards in bankruptcy. You will have to rely on a bank debit card after filing your case, at least for a while. If you hire our firm we will take the collection calls for you while you get ready to file bankruptcy.

The only way credit cards will not be discharged in a bankruptcy is if you commit fraud. Fraud involves making charges on the card in anticipation of filing bankruptcy. If you know that you are going to file bankruptcy and you make a lot of luxury purchases or take out big cash advances right before you file, you will probably be in trouble. Fraud can also involve filling out a false credit application. A creditor has to prove fraud in a separate lawsuit that is tied to your bankruptcy called an adversarial proceeding. This case is difficult to prove and requires hiring an attorney so creditors are careful about filing the case.

They usually make their decision to file the adversarial proceeding based on how much was charged and how soon the charges were made before filing. If you’ve only made a few small charges for necessities just before filing, the creditor probably won’t bother filing an adversarial proceeding. If you have made some large charges, it would be smart to make a few payments and wait a while before you filed even if you did not intend to commit fraud when you made the payments. Defending an adversarial proceeding can be expensive even if you didn’t intend to commit fraud.