Yes, credit card debt can be included in bankruptcy, and it is often the primary reason people file
Credit card debt is unsecured debt, meaning the card issuer has no claim to your home, car, or other property if you stop paying. This makes it one of the easiest debts to address through bankruptcy. When you file, credit card balances are either discharged (wiped out) in Chapter 7 bankruptcy or folded into a repayment plan in Chapter 13 bankruptcy. The card issuer cannot pursue collection after discharge, and the debt no longer appears as an active obligation on your credit report.
The process works the same way whether you owe one card or ten. You list all credit card accounts in your bankruptcy petition, including the creditor name, account number, and balance owed. The bankruptcy court then handles the rest — creditors are notified and must stop collection efforts when ready. You do not negotiate with individual card companies; the bankruptcy trustee manages the process.
Key Takeaways
- Credit card debt is unsecured and ranks low in priority, so it is often fully discharged in Chapter 7 bankruptcy or included in a repayment plan in Chapter 13.
- Once you file, creditors must stop calling and pursuing collection, even if your case is still pending.
- You must list all credit cards in your petition, even if you want to keep one and continue paying it — hiding accounts can result in case dismissal.
- Chapter 7 typically takes three to six months and wipes out credit card balances; Chapter 13 takes three to five years and restructures payments you can afford.
- Filing damages your credit score when ready, but the impact lessens over time and you can rebuild while the case is open.
How credit cards are treated in Chapter 7 bankruptcy
Chapter 7 is liquidation bankruptcy. A trustee is appointed to review your assets, sell non-exempt property if necessary, and distribute the proceeds to creditors. Credit card debt is unsecured, so it sits at the bottom of the priority list — behind taxes, child support, and secured debts like mortgages. In most Chapter 7 cases, there are no assets to sell, and credit card balances are straightforward discharged at the end of the case.
The discharge typically occurs four to six months after you file. Once it is entered by the court, the card issuer has no legal right to collect the debt. The balance becomes zero, and the account is closed. You cannot be sued, garnished, or contacted about that debt again. The only exception is if the creditor can prove fraud — for example, if you made large cash advances or purchases shortly before filing with no intent to pay — but this is rare and requires the creditor to file a separate lawsuit.
Chapter 7 has an income limit. If your household income exceeds the median for your state and family size, you must pass a means test to may have access to. The means test subtracts allowed living expenses from your income; if money remains, the court may require you to file Chapter 13 instead. The median income thresholds vary by state and change annually, so you will need to check your state's current figure when considering this route.
How credit cards are treated in Chapter 13 bankruptcy
Chapter 13 is reorganization bankruptcy. Instead of liquidating assets, you propose a repayment plan to the court that lasts three to five years. Credit card debt is typically unsecured, so it falls into the general unsecured category alongside medical bills and personal loans. You pay what you can afford based on your income and necessary expenses; any balance remaining at the end of the plan is discharged.
The amount you pay toward credit cards depends on your disposable income — what remains after you pay priority debts (like taxes and child support) and secured debts (like your mortgage or car loan). If you have little disposable income, you may pay credit cards pennies on the dollar. If you have more, you pay a higher percentage. The key is that the plan must be feasible: the court will reject it if the payments are unrealistic given your actual income and expenses.
Chapter 13 stops foreclosure and repossession when ready. If your home or car is at risk, Chapter 13 can halt the process while you catch up on missed payments through the plan. This is a major advantage over Chapter 7, which offers no protection if you fall behind on a mortgage or car loan. Credit card payments are paused during the plan, and creditors cannot contact you or pursue collection.
What happens to your credit cards after bankruptcy
Your credit cards are closed when you file bankruptcy. The accounts appear on your credit report as "included in bankruptcy" or "discharged in bankruptcy," depending on the chapter. This notation remains for seven to ten years, but its impact on your credit score decreases over time. A bankruptcy from five years ago affects your score far less than one from six months ago.
After discharge, you can rebuild credit by obtaining a secured credit card, becoming an authorized user on someone else's account, or taking out a credit-builder loan. Many people are offered new credit cards within months of discharge, often at higher interest rates. Using credit responsibly after bankruptcy — paying on time and keeping balances low — gradually restores your score. Most people see meaningful improvement within two to three years.
You cannot discharge the same credit card debt twice. If you file Chapter 7 and receive a discharge, you cannot file again for eight years. If you file Chapter 13 and complete the plan, you must wait six years before filing Chapter 7. This prevents people from using bankruptcy repeatedly to avoid the same debts.
Debts that cannot be discharged in bankruptcy
Most credit card debt can be discharged, but a few exceptions exist. If you incurred the debt through fraud — for instance, using someone else's card or making large purchases with false information — the creditor can challenge the discharge in court. Student loans are generally non-dischargeable unless you prove undue hardship, a high legal bar. Recent taxes, child support, and alimony also survive bankruptcy.
Cash advances taken shortly before filing (typically within 70 days) and large purchases made shortly before filing (typically within 90 days) may be presumed fraudulent and non-dischargeable. The creditor must file a complaint to challenge these, and you have the chance to respond. If the amounts are small or the timing is further out, the creditor may not bother to challenge them.
The cost and timeline of filing bankruptcy
Filing bankruptcy requires court fees and attorney fees. Court fees are set by the federal courts and currently total around $300 to $335 for Chapter 7 and $310 to $340 for Chapter 13, though these amounts can change. Attorney fees vary widely by location and complexity but typically range from $1,000 to $3,000 for Chapter 7 and $2,500 to $6,000 for Chapter 13. Some attorneys offer payment plans, and fee waivers are available if your income is below 150% of the federal poverty line.
Before filing, you must complete credit counseling with an approved agency. This is a brief course (usually one to two hours) that covers budgeting and debt management. After filing, you must complete a debtor education course before your discharge is entered. Both are required by law and cost $50 to $100 each, though fee waivers are available.
Chapter 7 typically concludes in three to six months. Chapter 13 takes the full length of your plan — three to five years — before the remaining debt is discharged. During a Chapter 13 plan, you make monthly payments to the trustee, who distributes them to creditors according to the plan.
Alternatives to bankruptcy for credit card debt
Bankruptcy is not the only option. Debt consolidation combines multiple credit card balances into a single loan, usually at a lower interest rate. This works if you have decent credit and stable income but does not reduce the principal owed. Debt settlement involves negotiating with creditors to accept less than the full balance. This damages your credit and can trigger tax liability on the forgiven amount, but it avoids bankruptcy.
A debt management plan through a nonprofit credit counseling agency restructures your payments without filing bankruptcy. The agency negotiates with creditors for lower interest rates and extended terms, and you make one monthly payment to the agency. This appears on your credit report but is less damaging than bankruptcy. It typically takes three to five years, similar to Chapter 13.
If you have significant assets or income, these alternatives may preserve more of your wealth than bankruptcy. If you have little income and substantial debt, bankruptcy often provides the fastest fresh start. A bankruptcy attorney can review your situation and explain which route makes sense for your circumstances.
Frequently Asked Questions
Will bankruptcy wipe out all my credit card debt?
In Chapter 7, yes — unsecured credit card debt is discharged unless the creditor successfully challenges it as fraudulent. In Chapter 13, remaining balances are discharged after you complete the repayment plan. The only exceptions are debts obtained through fraud or cash advances taken when ready before filing, which creditors can challenge in court.
Can I keep one credit card and not include it in bankruptcy?
No. You must list all debts and creditors in your bankruptcy petition, even if you want to keep paying one card. Hiding accounts can result in case dismissal or denial of discharge. If you want to keep a card after bankruptcy, you can reaffirm the debt — sign an agreement to remain liable — but this must be approved by the court and is rarely recommended.
How long does bankruptcy stay on my credit report?
Chapter 7 bankruptcy remains on your credit report for ten years from the filing date. Chapter 13 remains for seven years from the filing date. The impact on your credit score decreases significantly after three to five years, and you can rebuild credit during this time by using secured cards and paying on time.
Can creditors still contact me after I file bankruptcy?
No. The moment you file, an automatic stay goes into effect that prohibits creditors from calling, sending letters, or pursuing collection. Creditors who violate this can be sued for damages. If a creditor contacts you after filing, report it to your bankruptcy attorney or the trustee.
What if I cannot afford a bankruptcy attorney?
Many attorneys offer payment plans or reduced fees for low-income filers. Legal aid organizations in your area may provide free or low-cost representation if you may have access to based on income. You can also contact your local bar association for referrals to attorneys who work with people of limited means.