Can You Liquidate for Credit Card Debt?

Credit card debt is one of the largest forms of debt that people are getting into.  Accessible usage and high interest rates make credit cards one of the easiest ways to sink into a financial crisis.  When this happens, the debtor has a major option to think about pertaining to bankruptcy.

Those that have credit card debt are eligible to file for Chapter 7 bankruptcy.   The filing of Chapter 7 bankruptcy is a contract that is making the debtor’s property available for liquidation.  This will relieve the debtor of their unsecured debts. 

What are unsecured debts?

Unsecured debts are debts that are not backed by some form of collateral.  Most debts, such as home mortgages and automobiles are secured.  This means that if the payments are not made, the company can relinquish the home or vehicle that is being used as collateral.  However, when it comes to Chapter 7, it’s the unsecured debts that are able to be relieved. 

What is the Chapter 7 process?

Once it has been established that a Chapter 7 bankruptcy petition is going to be filed, there is then a trustee that is assigned to oversee the ordeal.  It’s the trustee’s duty to separate exempt and non-exempt property.  From there, the creditors are notified that a Chapter 7 petition has been filed. 

Subsequently, all of the non-exempt property of the debtor is then liquidated.  The cash that is received from this liquidation is then passed out to pay the creditors.  If there is any remaining cash it may go to the claim’s company. 

Once the credit card companies have been paid, the debtor is then discharged of the preceding debts.  Credit card debt is a messy thing to get into, and it is definitely the slipperiest of slopes when it comes to debt.  Steer clear of this kind of debt, and keep track of your finances.