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Discharging Credit Card Debt in Michigan

Is bankruptcy the only way to wipe out credit card debt?

For millions of Americans, repaying credit card debt is an endless battle. If you too are struggling to keep your head above water, it is important to understand that you have options. While filing for bankruptcy is an effective way to wipe out unmanageable debt, there are numerous other ways that you can regain control of your finances. For example, strict budgeting and strategic planning is a good way for you to start chipping away at your credit card debt. If that is not enough, our Michigan bankruptcy lawyer may be able to assist you in negotiating a settlement with the bank or the issuer of your credit card. If you are really in over your head, however, you may want to consider filing for bankruptcy.

How Credit Card Debt is Treated in a Chapter 7 Bankruptcy

If you are unable to get a handle on your credit card debt, Chapter 7 bankruptcy may be the financial solution that you are looking for. Through this debt relief process, you would be able to discharge most, if not all, of your unsecured debt—which means that you would be absolved of the responsibility to repay your overdue credit card bills once the bankruptcy process is over. During Chapter 7 bankruptcy, your non-exempt assets would be liquidated and the proceeds would be used to repay your creditors in order of priority. Since credit card debt is low on the scale, it is unlikely that the credit card company will be repaid at all.

However, the court can choose not to discharge these debts if:

  • You purchased luxury goods on a credit card - If you use a credit card to purchase "luxury goods" or services within 90 days of filing for bankruptcy ($650 or more), a judge can choose not to discharge the debt—as this could be seen as an attempt to defraud the court. However, this excludes any goods or services that are reasonably necessary for the support of you and your dependents (i.e. food, gas and clothing).
  • You used a credit card to take out a large cash advance - If you use a credit card to take out a large cash advance within 70 days of filing for bankruptcy ($925 or more), the debt will be considered "nondischargeable." It will not matter whether or not you used the money to purchase luxury items, as you will still need to show the court that you intended to repay the debt when you incurred it.

Will I repay credit card debt in a Chapter 13 bankruptcy?

Unlike Chapter 7 bankruptcy, Chapter 13 requires you to reorganize your debt and develop a suitable repayment plan—which will be executed over three to five years. You will be asked to repay creditors in order of priority, so whether or not you are able to repay your credit card debt will depend on the type and amount of all other debts that you have incurred. For example, you would first be required to repay all secured loans and priority unsecured debts before touching your credit card debt. If, at this point, you can afford to repay more of your debt, you will be required to do so. Any unsecured debts that have not been repaid at the end of your bankruptcy will be discharged by the court.

Contact Our Firm for a Free Consultation

If you are interested in discussing your case with a Michigan bankruptcy attorney from the Hensel Law Office, PLLC, we encourage you to contact our firm today for a free consultation.

Evening and weekend appointments are available –
call today at (888) 258-0651 to schedule a meeting.

Client Testimonials

  • Mr. Hensel walked me through every step.

    “I would highly recommend the Hensel Law Office!! Mr. Hensel walked me through every step, got my garnishments stopped very quickly (even got garnished wages returned to me!) and told me what to expect along the way. He answered all of my questions in a very timely manner- no matter what time I sent an email or gave him a phone call. Also, I felt his price was very reasonable compared to some of the other places that I called. Mr. Hensel answered plenty of questions that I had before I even became a client.”

    Carl

  • I greatly appreciate your time and effort.

    “It was a great pleasure and relief working with you through that tough time. I greatly appreciate your time and effort on our case. I will gladly and confidently recommend you to anyone I know facing a tough financial time requiring your expertise.”

    Jay

  • You made a difficult experience so much easier.

    “Back a few years ago, you helped me through a bankruptcy. I still tell people how you made a difficult experience so much easier, with your clarity, support, and friendly approach to the law. I'm still very appreciative for all your help – it really helped to pull me out of a difficult place and put my life back on track.”

    Eric

  • Tom Hensel is definitely the right attorney to call!

    “I was referred to Tom Hensel by a friend. My first impression was not only was Tom professional but he's so kind and caring too. He helped my husband and I through an embarrassing, scary situation and definitely made it more positive one. He guided us through our options and helped us make the right decision for us which ended up being a chapter 7 bankruptcy. Tom was so knowledgeable and helped us throughout the whole process. He never once made us feel uncomfortable or dumb when we had questions. He was also very easy to get a hold of when questions would come up and would always return our calls and emails promptly. I strongly recommend Tom to anyone going through this kind of financial nightmare. Do yourselves a favor and call him right away. He will help you get on the right path again. Our only mistake was waiting so long to call him!! When we in court waiting our turn all the other attorneys referred to their clients as "The debtors" Tom on the other hand acknowledged us by our names. Little things mean a lot and that left a lasting impression with us. Tom Thank You again for all your help!!”

    Stacy S.

  • We have and will continue to recommend you to others in need of a fresh start.

    “Dear Tom, my husband and I wanted to express our deepest thanks for the help you gave us during our embarrassing and stressful time. I was very impressed that you returned every phone call in a timely manner. You were able to explain exactly what was going to happen in words that "we" could understand. You answered every question we threw at you. The whole bankruptcy process from start to finish was complete in the time you told us it would take. Your professionalism yet friendliness made the whole experience for us almost enjoyable... almost! We have and will continue to recommend you to others in need of a fresh start.”

    Melissa