Bankruptcy Law Mid-Michigan Dennis Barrett

One purpose of bankruptcy is to provide debtors with a fresh start. If you’ve just gotten a bankruptcy discharge, make the most of your fresh start. . Dennis Barrett is dedicated to helping his clients manage their obligations and take their lives back from creditors. With over 30 years of experience, Barrett Law, PLLC offers honest assessments of our clients' financial circumstances, knowledgeable advice on the best course of bankruptcy action, and when to take action for debt relief.

Bankruptcy and Credit Card Debt

A debtor can eliminate credit card debt in bankruptcy.. The debtor's decision to file for Chapter 7 or Chapter 13 will determine whether the debtor must repay credit card companies a portion of the amount owed and how long it will take to discharge the credit card debt. Chapter 13 bankruptcy will not eliminate credit card debt immediately. Chapter 7 bankruptcy, however, allows a debtor to eliminate credit card debt within months after filing for bankruptcy.

Discharging Credit Card Debt in Chapter 7

A debtor can discharge credit card debt in a Chapter 7 bankruptcy. In Chapter 7, certain types of debt are eligible for discharge. Bankruptcy will eliminate credit card debt as long as it is unsecured debt. Unsecured debt is not secured by a lien on property. When a debt is discharged in bankruptcy, it means that the debtor is no longer legally responsible for paying the debt. A creditor, therefore, cannot initiate collection activities against the debtor.

Eliminating Credit Card Debt in Chapter 13

A debtor can eliminate credit card debt in a Chapter 13 bankruptcy, but the debt is not discharged until after the debtor has completed a three or five year repayment plan. A Chapter 13 bankruptcy requires that a debtor pay unsecured creditors a certain amount of the debt owed. Once the debtor completes the repayment plan, the bankruptcy court will discharge the remainder of the unsecured credit card debt.

When Credit Card Debt is Not Eligible for Discharge in Bankruptcy

A credit card company may prevent the discharge of debt by challenging it in an adversary proceeding. The credit card company may challenge a claim by using the following legal theories: the debtor used fraudulent information on the credit card application or the debtor continued to use the card even though the debtor did not intend to repay the creditor.

Credit card companies typically use the second theory to challenge a discharge. To prevail, the credit card company must show that there is evidence that the debtor engaged in fraudulent behavior. A credit card company may use the following examples as evidence:

  • The debtor used the credit card while unemployed.
  • The debtor used the credit card even though there was no reasonable belief that the debt could be repaid.
  • The debtor went on a spending spree or took cash advances shortly before filing for bankruptcy.
  • The debtor made charges after consulting with a bankruptcy lawyer .

Bankruptcy courts consider the timing of the debt, the amount charged, and whether the debtor made the charges in bad-faith.

Lansing and Mid-Michigan area residents contemplating bankruptcy can contact the Michigan office of Barrett Law, PLLC for a free initial consultation at 517-694-7920.