In California, credit card debt is a frequent cause for needing bankruptcy relief. Credit cards are a common necessity of life. With inflation rising, more turn to credit cards to afford to pay for groceries and other life necessities. Most never expect their card balances will rise to the point where they can no longer make minimum payments. It happens, sometimes slowly over time, and often surprisingly, to card users. Easy-to-obtain credit and high default interest rates contribute to this spiral.

Unexpected job loss or income reduction are often the last straw for Los Angeles residents trying to stay on top of their mounting credit card debt payments.

cutting up credit card

Regardless of what caused it, credit card debt can quickly turn into a seemingly insurmountable mountain of problems. However, it is possible to have credit card debt discharged through bankruptcy and allow the debtor to rebuild their financial future. Retaining an experienced attorney is important to ensuring that the process is handled correctly. If you are in need of assistance then contact my office to speak with a Los Angeles bankruptcy lawyer.

Lawyer Assisting Those in Los Angeles with Credit Card Debts

Credit card debt can be debilitating. But it can be eliminated (discharged) in bankruptcy Chapter 7. For those Los Angeles Area residents who are not eligible for Chapter 7, they may still have a large portion of their credit card debt discharged in a Chapter 13 proceeding. Once a bankruptcy case is filed, all collection action on debts must stop immediately. This includes actions such as sending letters, harassing phone calls, and filing lawsuits to collect. Following the conclusion of one’s case, credit card debt will be discharged. Typically, most card account will be closed, even if no debt was owed on the card prior to the bankruptcy filing. Mark J. Markus is an attorney who can help you determine how to handle each outstanding credit card balance in your case.

too many credit cards

In most bankruptcy cases it is possible to discharge all credit card debt, but it is not automatic. Creditors have an opportunity to object to the discharge of any debt if they can prove the charges were made fraudulently. What this really means is using the card without the intent or reasonable expectation of being able to repay. For example, if a person lied on their credit card application about their income to obtain a high credit limit, this could prevent the debtor from discharging that amount in bankruptcy. Other charges for luxury or non-essential items, or just large charges, made just before filing bankruptcy may be deemed fraudulent. In addition, debtors may be required to repay cash advances drawn within a period of time before the Petition is filed. An experienced bankruptcy lawyer can review account activity so that you understand in advance how this may impact your case.

California Chapter 7 and 13 Lawyer Who Will Explain Your Bankruptcy Options

bankruptcy attorney Mark J. Markus
Attorney Mark Markus

An experienced bankruptcy lawyer is needed to properly evaluate your case. This is true whether you’re dealing with credit card debt or any other type.

Mark J. Markus has practiced exclusively bankruptcy law since 1991 in the Greater Los Angeles Area. He has obtained bankruptcy discharges of credit card and other debt obligations for thousands of individuals and businesses in California.

Bankruptcy cases are only filed by our office after weighing all alternatives and analysis of the pros and cons of filing. For many, bankruptcy is not the best solution and for them I do not recommend filing. But from knowledge comes power, and it is important to have an experienced bankruptcy attorney review your facts and explain the pros and cons of pursuing a bankruptcy case.

My initial consultations are comprehensive and thorough, which is different from most other attorneys who give very short initial consults and guesstimates as to what you can do, without having all the necessary facts. In my consultations, I analyze all relevant information, including your income, expenses, assets, debts, and other factors. That way I can answer any questions you have, and I can tell you which chapter(s) you may be eligible for, what property/assets you can protect, and identify any problems that might arise in your case. After my consultation You will know the costs and benefits of filing a case for your personal situation. Our firm serves all cities and counties in California, including counties of Los Angeles, Orange, Santa Barbara, San Diego, Riverside, Fresno, Sacramento, San Bernardino, Ventura, San Luis Obispo, Tulare, Contra Costa, Shasta, Marin, Alameda, Kern, and San Francisco and cities including Burbank, Glendale, Sylmar, Panorama City, Simi Valley, San Fernando Valley, Irvine, Santa Clarita, Oxnard, Huntington Beach, Ontario, Rancho Cucamonga, Corona, Torrance, Agoura, Long Beach, San Fernando, Van Nuys, Sherman Oaks, North Hollywood, Anaheim, Hollywood, Riverside, San Bernardino, Lancaster, Palmdale, Pasadena, and many more.

Frequently Asked Questions (FAQ’S) About Credit Cards In Bankruptcy

Can You Keep Any Credit Cards After Filing Chapter 7 Bankruptcy?

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That is really up to the credit card companies. In general, when you file a bankruptcy, the accounts are closed. This occurs even if you do not owe any money on a card. For those that you owe a balance, you can agree to pay that balance and keep your credit privileges on that account. This is done by entering into what is called a reaffirmation agreement. But I almost never recommend doing this. It is not difficult to get new credit after bankruptcy, so it is not usually advantageous to agree to repay a debt that you can eliminate in bankruptcy. The exception to this is credit union cards. Sometimes it makes sense to agree to repay a low balance debt to a credit union in order to retain privileges with that credit union. Since credit unions offer a lot of services beyond just the credit card, this sometimes makes sense.

Can I Get a New Credit Card After Chapter 7 Bankruptcy?

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Yes. How quickly depends on a number of factors, but it is usually not very difficult. Most people’s credit scores increase rapidly after a Chapter 7 filing. So, qualifying based on credit score should not be that hard. Other factors include your employment status such as whether you are self-employed or regular wage job, and how long you’ve been with your current employer.

Should I Stop Paying My Credit Cards Before Bankruptcy?

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This really depends on the individual facts and circumstances of a case. The real question ought to be CAN you stop paying on your credit cards before bankruptcy, not should you. And yes, in most cases, you can stop paying them. But creditors can object to the discharge of debts. So, if you have a lot of recent charges on the card, it may be beneficial to make more payments. And it may also be prudent to wait additional time before filing bankruptcy, particularly if the usage is for cash advances or purchase of “luxury” goods in the past 90 days. But this all has to be balanced with your ability to continue to make payments. This is something that can only be decided after a comprehensive consultation with an experienced bankruptcy attorney. I always provide advice on what to do with credit card payments in my initial consultations.

Should I Stop Using My Credit Cards Before Filing Bankruptcy?

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Absolutely. The closer in time you have usage on your credit cards before filing bankruptcy, the higher the risk of an objection to discharge. Sometimes emergencies happen, of course. But you need to be prepared to have to repay recent charges on the cards if the creditor objects to discharge.

What Happens with Store Credit Cards After Bankruptcy?

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Debts for items purchased on store credit cards, like Macy’s, Target, Best Buy and so on, are dischargeable in bankruptcy like any other debt. However, some items (other than clothing) are secured. For example, if you buy appliances or furniture and such, the store retains a security interest in those items. What this means is they are entitled to return of the items if you don’t pay them. You always have the option of paying them whatever the current fair market value on the date your bankruptcy case is filed. This enables you to keep the property after the bankruptcy. In many cases, however, it is not even necessary to pay them to keep the property. This is something an experienced bankruptcy attorney can advise you on before filing your case.