Too much credit card debt can be overwhelming for any Maryland resident. Bankruptcy might be a good idea if it seems impossible to alleviate the burden. This is what to know about filing for bankruptcy for credit card debt.
Credit card debt and Chapter 7 bankruptcy
Chapter 7 bankruptcy requires passing the means test, establishing that your income is under the state’s median. After filing, your credit card debt is discharged and you will not have to pay it back. If you paid for necessities with your credit card, bankruptcy should help alleviate your financial hardship. However, if you used your card to buy large quantities of luxury goods just before filing for bankruptcy, you cannot discharge that debt.
Credit card debt and Chapter 13 bankruptcy
If you have a higher income and are financially able to pay back your debts but need more time to do so, Chapter 13 bankruptcy might be the way to go. It gives you a period of three or five years to repay your debt while allowing you to keep your property. The repayment plan can help bring you relief because it gives you ample time to pay your creditors. You can also repay only a portion of your credit card debt and have the rest discharged at the end of your repayment period.
Bankruptcy and your credit
In some cases, if you’re having trouble managing credit card balances, your credit score might not be the best. However, filing for bankruptcy can further affect it. A Chapter 7 filing remains on your credit report for 10 years, while Chapter 13 remains for seven.
Unlike filing for bankruptcy for other forms of debt, it might benefit you when you do so for credit card debt. Although your credit score may initially decrease, over time, your score will go back up as you learn to manage your finances.