Bankruptcy and Credit Card Debt: What You Should Know

Thousands of Floridians are currently struggling with credit card debt, and Florida has one of the highest rates of credit card delinquency in the country, according to Forbes. On average, the total debt for Florida households is more than $56,000, with a substantial amount of that debt coming from credit card debt. Nationwide, the Federal Reserve Bank of St. Louis estimates that 46 percent of American households — nearly half — have credit card debt, and thousands of those households do not have a plan for repaying it. Indeed, many Floridians, like Americans across the country, make only monthly minimum payments when they are current on their credit card bills, resulting in credit card bills growing substantially higher as a result of very high interest rates.

For many Floridians with substantial credit card debt and no near-time possibilities of repayment, a consumer bankruptcy filing could be a solution to getting out of debt. Consider the following information about credit card debt and bankruptcy from our St. Petersburg bankruptcy lawyers.

Credit Cards Are Often Used for Emergency Expenses and Necessities 

It is important to avoid the stigma surrounding consumer bankruptcy filings, and the myths about who files for bankruptcy. While there is a commonly erroneous idea that Americans get into credit card debt because of financial mismanagement, incompetence, or abuse of credit, the data suggests the very opposite. Indeed, according to the St. Louis Fed, the majority of credit card debt holders are firmly in the middle-class income brackets, and they often accrue credit card debt as a result of unexpected emergency expenses and medical bills.

Credit Card Debt is Usually Dischargeable in Consumer Bankruptcy Cases 

In most consumer bankruptcy cases, credit card debt of all types can be eligible for discharge. What this means is that, by filing for bankruptcy, you can have your credit card discharged so that you are no longer liable for it. This includes general bank credit cards and retail store credit cards.

Few Exceptions to Credit Card Discharge 

There are some, but few, exceptions to credit card discharge. Generally speaking, credit card debt is only likely to be nondischargeable debt if it was accrued too close to the date that you filed for bankruptcy (either 90 days or 70 days depending on whether you made a charge or took a cash advance), and when the credit card debt has been used for luxury goods or services. The term luxury goods and services is usually determined by the amount of debt incurred and when it was not incurred for a necessity (like paying a bill, for example).

Contact a St. Petersburg Bankruptcy Lawyer Today for Assistance 

If you are struggling with credit card debt and need help, filing for bankruptcy could be the best option to get out of debt. An experienced St. Petersburg bankruptcy attorney at the Law Offices of Stephen Barszcz can speak with you today to tell you more about bankruptcy options for Florida residents, and to provide you with tailored advice about bankruptcy based on your specific financial circumstances. For many Floridians, bankruptcy is a way out of credit card debt that can allow you to get a fresh start and to begin rebuilding. Contact us today to find out more about how we can assist you.

Sources:

law.cornell.edu/uscode/text/11

stlouisfed.org/on-the-economy/2024/may/which-us-households-have-credit-card-debt#:~:text=According%20to%20the%20SCF%20data,debt%2C%20making%20it%20relatively%20expensive