Chapter 13 bankruptcy is often misunderstood, but with proper care, it can be a lifesaving tool. In broad strokes, Chapter 13 is a way to create a structured payment plan to make good on your debts, while putting a halt to collection tactics. “But doesn’t a bankruptcy discharge debt,” you might be asking? Yes and no. Not all debts are treated the same under a Chapter 13 procedure, which may help you repay some debts in full while discharging others. Chapter 13 can be especially effective at discharging unsecured debts such a credit cards.
Credit card debt is the easiest kind of debt to acquire, and also some of the easiest kind of debt to see pile up. Part of this is due to the way that credit card interest rates can climb if you miss payments, and part of it has to do with the ease of acquiring credit card loans. If you are considering Chapter 13 to discharge your credit card debt, you should certainly consult with an experienced attorney to see what your structured repayment would look like, and if discharge is possible in your case.
Credit card companies understand as part of their business model that they are making innately risky loans, because credit cards are not not issued against any specific collateral, such as a house or a car. If you are tempted to feel obligated to a credit card company because of your debt, please allow yourself to let go of that obligation. Not only do credit card companies understand this risk and build into their business plan, their collections tactics (or the tactics of collections subcontractors) regularly exceed what the law allows. If you cannot reasonably repay the debt and there is a legitimate way to discharge it, you should certainly consider the opportunity.
It is never wise to begin a bankruptcy procedure without proper legal counsel. Each procedure has many rules that must be followed, and missteps along the way can be quite costly or undue months of hard work. With proper legal guidance, you can explore your options as you carve a path forward to a fresh start.