Chapter 7 * cases starting at $1000 in attorney fees plus court filing fees of $338
Chapter 13 * cases starting at $750 down which includes the filing fees and then hourly work will be billed
* Please note that all cases require a full consultation before an individual attorney fee quote can be made

Chapter 7 * cases starting at $1000 in attorney fees plus court filing fees of $338
Chapter 13 * cases starting at $750 down which includes the filing fees and then hourly work will be billed
* Please note that all cases require a full consultation before an individual attorney fee quote can be made

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What will credit card companies do when you file for bankruptcy?

On Behalf of | Jan 15, 2025 | Credit Card Debt

Filing for bankruptcy can bring new opportunities for rebuilding your financial situation. However, it can also bring significant changes to how credit card companies handle your accounts. 

Understanding what to expect during and after bankruptcy can help you prepare for the process.

Actions during bankruptcy

Once you file for bankruptcy, the court issues an automatic stay. This prevents credit card companies from contacting you for payments, filing lawsuits or pursuing collections. They must halt all attempts to recover the debt, including phone calls and emails. This stay provides temporary relief from credit card debt as the bankruptcy case progresses.

Credit card companies typically close accounts when a cardholder files for bankruptcy. Even accounts in good standing may close if they are part of a bankruptcy filing. Additionally, creditors may review the filing to determine if there are grounds to challenge the discharge of debts. For instance, creditors might scrutinize transactions made near the filing date or luxury item purchases, as these could be signs of misuse.

Consequences after bankruptcy

The bankruptcy process will discharge eligible credit card debt. In Chapter 7 cases, most unsecured debts, including credit card balances, will discharge. In Chapter 13, a repayment plan addresses the debts, often reducing the amount owed.

After bankruptcy, credit card companies may report the discharged debts to credit bureaus. This information will appear on your credit report and can impact your credit score for several years. Some creditors may offer secured credit cards as a way to rebuild credit, though these require a deposit as collateral.

While bankruptcy stops collection efforts and relieves financial burdens, it also affects your ability to use credit in the future. Credit card companies often view bankruptcy as a risk factor. This can result in limited access to new lines of credit or higher interest rates on future accounts.

Although bankruptcy impacts your relationship with credit card companies, it also offers a fresh start. Developing strong financial management after the process ends can help you rebuild credit over time.

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The Law Office of Kim Covington, is a woman owned debt relief agency, and I have helped families, individuals and small businesses, file for bankruptcy relief under the U.S. Bankruptcy Code, for over 24 years.