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Is Chapter 7 bankruptcy good for credit card debt?

On Behalf of | Apr 7, 2021 | Bankruptcy

Credit card debt is a significant problem in America. In fact, most households do have debt. Out of the 50 states, Tennessee ranks 42nd in debt per capita with an average amount of $3,220 per capita balance as of 2019.

Chapter 7 bankruptcy is one kind of bankruptcy that could help with credit card debt. In fact, it works well to have all kinds of unsecured debts dismissed, so long as the person who applies meets the requirements set by the court.

What happens when someone falls behind on credit card debt?

When someone falls behind on credit card debt in Tennessee, the first thing that will happen is that the credit card company will reach out with a letter or phone call to see if the individual knows they missed a payment.

After this, if the debt remains unpaid, the lender may send the debt to collections. At that point, the collections agents will call or reach out with letters to try to get in touch with the borrower. In Tennessee, the collectors may call by phone or send a letter to identify themselves. They should also tell you who the debt is for and which company the debt was made with.

Debt collectors aren’t permitted to refuse giving you information about who they are, how to reach the agency or the contact information for the original creditor. If they attempt to refuse to give you this information, then you may be able to make a claim against them as well.

Additionally, collections agencies are not able to add interest or fees to the amounts due unless those were added as a part of your original contract.

How can Chapter 7 bankruptcy help?

Chapter 7 bankruptcy helps in a few ways. To start with, filing for bankruptcy immediately stops calls and contact from credit collectors. Beyond that, the bankruptcy may help you have some charges dismissed, so that you don’t need to pay them back. Since credit card debts are unsecured in most cases, most or all of them may be dismissed in court. That helps you start fresh with few or no debts, so you can get back into control over your finances.