Before you consider elimination of your credit card debt using Chapter 7 or Chapter 13, there are a couple of things you need to consider. While it might seem like the solution to all your problems to just have a judge wipe out all your debt, you could be getting yourself into an even bigger financial mess.
If approved, when you file Chapter 7, your assets are sold and the money is paid to your creditors. Typically, they'll have to settle for just pennies on the dollar, but at least they'll get something. This method of credit card debt elimination is one of the worst options you can choose. Your debt is completely eliminated but it looks horrible on your credit report - and it stays there for at least 7 years.
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Your next alternative for elimination of your credit card debt is to file Chapter 13. With this option your creditors usually agree to lower your balance and a payment plan is set up - which you must agree to. And once you agree to that plan you need to stick to it. The first time you make a payment, all bets are off and your creditors are allowed to come after you again.
Another major drawback in filing Chapter 13 is that they judge may decide, instead of granting your request, to send you to a credit counseling service. If that's the case, your participation in their program will be mandatory, and supervised, and you'll be responsible for their fees - as well as whatever payment arrangements they make with your creditors. All of this on top of the fees you've already paid a lawyer to represent you in your Chapter 13 case.
Before you consider filing bankruptcy to eliminate your credit card debt, your best option is to consult with a credit card debt reduction service to see if it's possible to reach a mutually beneficial re-payment plan on your own terms - instead of letting the government take control of your finances.
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