Bankruptcy does not erase credit cards on its own — you file bankruptcy as a person, and credit card debt is included in that filing
You cannot file bankruptcy on credit cards alone. Bankruptcy is a legal process that covers all your debts at once, not individual accounts. When you file for bankruptcy, credit card debt is automatically included in the case, along with medical bills, personal loans, and other unsecured debts. The type of bankruptcy you file — Chapter 7 or Chapter 13 — determines whether those debts are erased, reorganized into a repayment plan, or handled some other way.
The decision to file bankruptcy is about your overall financial situation, not about one debt. If you owe $8,000 on credit cards but have no other debts and a stable income, bankruptcy is usually not the right tool. If you owe $40,000 across multiple cards, medical bills, and a car loan, and you cannot pay any of it, bankruptcy becomes a real option to consider.
Key Takeaways
- Chapter 7 bankruptcy erases unsecured debts like credit cards, but you must pass a means test based on your income and expenses, and you may lose non-exempt assets.
- Chapter 13 bankruptcy creates a three- to five-year repayment plan where you pay back a portion of your credit card debt and other debts from your income.
- You must file through federal bankruptcy court, and you are required to complete credit counseling before filing and a financial management course after filing.
- Bankruptcy stops collection calls and lawsuits when ready through an automatic stay, but it damages your credit score for seven to ten years.
- The cost to file ranges from $300 to $400 in court fees plus attorney fees, which vary by location and complexity but often run $1,000 to $3,000 for Chapter 7 and $2,500 to $6,000 for Chapter 13.
Chapter 7 bankruptcy: erasing credit card debt
Chapter 7 is the bankruptcy type that erases debts. If you file Chapter 7, your credit card balances, medical bills, and personal loans are discharged — meaning you no longer owe them. The catch is that you must pass a means test, which compares your income to the median income in your state for a household your size. If your income is below the median, you pass automatically. If your income is above the median, the court looks at your expenses to see whether you have money left over each month to pay debts.
If you pass the means test, the bankruptcy trustee (a court-appointed official) may sell your non-exempt assets — things like a second car, investment accounts, or valuable jewelry — to pay creditors. Your primary home, primary car, and retirement accounts are usually protected. After the trustee's work is done, remaining debts are erased, and you receive a discharge order from the court.
Chapter 7 takes three to six months from filing to discharge. During that time, creditors cannot contact you or sue you because of the automatic stay, a court order that stops collection activity the moment you file.
Chapter 13 bankruptcy: reorganizing credit card debt into a payment plan
Chapter 13 is the bankruptcy type that reorganizes debts. Instead of erasing credit cards, you file a repayment plan with the court that lasts three to five years. During that time, you make one monthly payment to a bankruptcy trustee, who distributes the money to your creditors according to the plan. Credit card debt is usually unsecured, which means it is paid after secured debts (like a car loan or mortgage) and priority debts (like recent taxes or child support).
Chapter 13 does not require you to pass a means test. You can file it even if your income is above the median, as long as you have a regular income and can show the court that your plan is feasible. Many people choose Chapter 13 because they want to keep assets the trustee might sell in Chapter 7, or because they are behind on a mortgage or car payment and need time to catch up.
At the end of the plan, any remaining credit card balance that was not paid through the plan is erased. This is called a discharge. Chapter 13 also stops collection calls and lawsuits when ready through the automatic stay.
The bankruptcy filing process and what it requires
Bankruptcy is filed in federal court, and the process is the same regardless of which chapter you choose. You must hire a bankruptcy attorney or file pro se (without an attorney), though filing without a lawyer is rare and risky because the paperwork is complex and mistakes can result in dismissal.
Before you file, you must complete a credit counseling course with an agency approved by the U.S. Trustee Program. This course covers budgeting and alternatives to bankruptcy and usually costs $50 to $100. You receive a certificate, which you must include with your bankruptcy petition.
Your attorney prepares a petition that lists all your debts, assets, income, and expenses. You file this petition with the federal bankruptcy court in your district. The court assigns a trustee to your case. Within 14 days, the trustee holds a meeting of creditors (also called a 341 meeting), where you answer questions under oath about your finances. Most creditors do not attend.
After the 341 meeting, you must complete a financial management course, which covers budgeting and rebuilding credit. This course also costs $50 to $100 and must be finished before your discharge is granted.
What happens to credit card accounts during bankruptcy
Once you file bankruptcy, credit card companies must stop calling you and sending bills. The automatic stay prevents them from continuing collection efforts. If a credit card company violates the stay by calling or suing after you file, you can report them to the court and potentially recover damages.
In Chapter 7, credit card debt is erased, and the accounts are closed. The credit card company writes off the debt and reports it to the credit bureaus as discharged in bankruptcy.
In Chapter 13, you keep the accounts open during the repayment plan, but you cannot use the credit cards. The plan requires you to stop incurring new unsecured debt. If you use a credit card during the plan, the trustee can object to your discharge, and the court can dismiss your case.
After your discharge, you are no longer legally obligated to pay the credit card debt. If a creditor tries to collect after discharge, that is a violation of bankruptcy law, and you can sue them.
How bankruptcy affects your credit and finances
Bankruptcy damages your credit score significantly. A Chapter 7 bankruptcy stays on your credit report for ten years from the filing date. A Chapter 13 bankruptcy stays for seven years from the filing date. During this time, your score will be lower, and you will pay higher interest rates on new credit.
However, many people find that their credit score actually begins to recover within one to two years after discharge, especially if they use secured credit cards or become an authorized user on someone else's account. The reason is that bankruptcy removes the unpaid debts that were dragging the score down, and it shows creditors that you have a legal fresh start.
Bankruptcy also affects your ability to borrow. Most mortgage lenders require at least two years after a Chapter 7 discharge before you can get a home loan, and some require three to four years. Chapter 13 is sometimes viewed more favorably because you have already demonstrated repayment discipline during the plan.
Costs and fees for filing bankruptcy
Filing bankruptcy costs money upfront. The federal court filing fee is $338 for Chapter 7 and $313 for Chapter 13. The credit counseling course costs $50 to $100, and the financial management course costs $50 to $100. These are your direct costs to the court and approved agencies.
Attorney fees vary by location and the complexity of your case. In many areas, Chapter 7 costs $1,000 to $3,000 in attorney fees, and Chapter 13 costs $2,500 to $6,000. Some attorneys offer payment plans or reduced fees for people with very low income. If you cannot afford an attorney, you may be able to find a legal aid organization in your area that provides bankruptcy help for free or at a reduced cost.
Some bankruptcy attorneys offer a free initial consultation, so you can discuss your situation and get a fee estimate before you commit.
Alternatives to bankruptcy for credit card debt
Bankruptcy is not the only option for dealing with credit card debt. Debt consolidation combines multiple credit card balances into one loan with a lower interest rate, which reduces your monthly payment and the total interest you pay over time. This works only if you can get approved for a consolidation loan and if you stop using the credit cards.
Debt settlement involves negotiating with credit card companies to pay less than you owe. A settlement can damage your credit score, but usually less than bankruptcy does. Settlement also takes longer — often one to three years — and there is no may provide the creditor will agree.
A debt management plan is a formal agreement with a credit counseling agency that negotiates lower interest rates and payment terms with your creditors. You make one monthly payment to the agency, which distributes it to your creditors. This does not erase debt, but it can make it manageable.
If your income is very low and your debts are high, bankruptcy may be the only realistic option. A bankruptcy attorney can review your situation and tell you whether you are a candidate for Chapter 7 or Chapter 13, or whether another option makes more sense.
Frequently Asked Questions
Can I file bankruptcy on just my credit cards and leave other debts out?
No. Bankruptcy covers all your debts at once. You cannot choose to include some debts and exclude others. If you file, credit cards, medical bills, personal loans, and other unsecured debts are all included in the case. Secured debts like mortgages and car loans are also included, though you can keep those assets if you continue making payments.
Will bankruptcy stop credit card companies from calling me?
Yes. The automatic stay, which takes effect the moment you file, stops all collection calls, letters, and lawsuits. Credit card companies must stop contacting you. If they continue after you file, you can report the violation to the court and potentially recover money damages.
How long does it take to get credit card debt erased in Chapter 7?
Chapter 7 typically takes three to six months from filing to discharge. The trustee has 60 days after the 341 meeting to object to your discharge, and if there are no objections, the court grants your discharge order. After that, the credit card debt is legally erased.
Can I use my credit cards again after bankruptcy?
In Chapter 7, the credit card accounts are closed and erased, so you cannot use them. After discharge, you can explore for new credit, though interest rates will be higher. In Chapter 13, you cannot use credit cards during the repayment plan. After discharge, you can explore for new credit.
What is the difference between Chapter 7 and Chapter 13 for credit card debt?
Chapter 7 erases credit card debt entirely if you pass the means test, but you may lose non-exempt assets. Chapter 13 reorganizes credit card debt into a three- to five-year repayment plan, and you keep your assets but must make monthly payments. Choose Chapter 7 if you have little income and few assets. Choose Chapter 13 if you have income to repay some debt, or if you want to keep assets or catch up on a mortgage or car payment.