Credit Card Debt Discharge
What it Means in a Bankruptcy Filing

A credit card debt discharge is a process that happens as part of a bankruptcy proceeding wherein all your credit card debts are cancelled. Effectively, this means you are no longer responsible for any outstanding credit card balance.

Because of the nature of credit card debt and the way it is dealt with in the bankruptcy code the vast majority of these financial obligations will part of any bankruptcy filing you are part of, as long as you take care to file all the required documents correctly. However, there are a few instances where it is not possible to discharge credit card debt.

Discharging Credit Card Debt

Credit card debt is generally unsecured consumer debt. That means it the debt is not secured by any specific collateral like a house or automobile. However, in some sense at least, it is secured against your credit score and credit rating, which is still very valuable to anyone needing to purchase an automobile, have a credit card, or take out a loan.

For the average consumer who runs into trouble with debt simply because they have overused their credit cards, you probably will not have to worry much about whether or not your debt will able to be discharged during a bankruptcy. However, when there is any hint of fraud in the picture things can get much more complicated. Credit card accounts that were opened by fraudulent means, or bills that were run up by a fraudster without any intention of repayment, are very likely not going to get discharged in bankruptcy.

These are some of the actions that may lead to the suspicion of fraud and an inability to discharge the debt in bankruptcy.

• You used your credit cards excessively prior to filing bankruptcy.
• You used the card for dubious or unnecessary purchases prior to a bankruptcy filing.
• The credit cards of concern were only issued recently.
• You made charges to the card in question after talking to a lawyer about bankruptcy.

Challenge of Discharge by Creditors

Suspected fraud is the primary reason a creditor will challenge the discharge of a debt. However, once you are in the bankruptcy process, most credit card companies will look for any reason they can to stop your debt from being discharged.

So be forewarned, even if your account was opened legitimately and you did fully intend to pay back your debt, the credit card company may try to make it appear otherwise.

Make sure you hire a lawyer who is capable of dealing with this contingency should it pop up. Also, make sure you gather as much detailed documentation and evidence as possible that demonstrates your original intent to honestly pay off your debt.

Remember that before you declare bankruptcy, it is in the best interest of your credit card company to reach an alternative agreement, such as a debt settlement or a reduced interest rate. This is because once you file for bankruptcy, in all likelihood the credit card company will end up getting nothing from you. It is better for them to accept partial or reduced payment than get nothing.

Blocking of Discharge by a Judge

In some instances, the a credit card debt discharge will be stalled not by the creditor but by the judge. Again, this will most likely happen in cases where fraud is suspected. If the card was used for excessive or otherwise questionable spending, such as a vacation or other non-essentials, just prior to the bankruptcy filing, the judge will want to hear some very good reasons why this took place.