Clear Credit Card Debt with Chapter 7 Bankruptcy

Chapter 7 bankruptcy is amongst the best solutions for dealing with serious debt. Whilst it isn't possible to write-off either car or student loans under current bankruptcy laws, you can clear credit card debt, medical bills and certain other unsecured debts.

Credit Card Default Rates

A recent Nilson Report revealed that debt on charge cards was as much as $972.73 billion at the end of 2008. As unemployment has risen so has the number of people defaulting on their credit agreements.

- Citigroup have written-off 10.21% of all credit card balances in March 2009.
- Wells Fargo's default rate rose from 9.68% to 10.03% in April 2009.
- Discover Financial Services default rate increased from 7.39% to 8.26% in April 2009.

* Figures from 2009 company reports.

Clear Credit Card Debt

Whilst card providers are able to sell the debt on to collection agencies and write-off losses against their taxes, this isn't possible for consumers. However, it may be of assistance to those who qualify under the rules.

Chapter 7 Bankruptcy

It is possible to clear credit card debt by filing under chapter 7, provided that your monthly income is below the state median. An attorney will be able to assist with this process. Many attorneys are able to use completely legal methods to reduce income for qualification purposes. A further requirement is that the debtor doesn't have non-exempt assets, such as stocks and shares. If this is the case, chapter 13 bankruptcy, debt settlement or a Debt Management Plan may be a more appropriate option.

Although there remains a stigma attached, chapter 7 Bankruptcy is the perfect debt solution for those who wish to clear credit card debt. Many individuals with serious debt don't have sufficient disposable income available to offer creditors an acceptable monthly repayment. Filing for bankruptcy allows someone to become debt-free in just 4-6 months.

Sources

(15 May, 2009). "Credit Card Defaults Reach Record Highs in April." Reuters News.

Disclaimer: This article in no way attempts to provide legal, financial or tax advice. One should consult a licensed attorney, tax advisor, or other qualified financial professional before proceeding.