A credit card is unsecured: the bank lent you money with nothing but your promise to pay. A mortgage or a car loan is secured by the house or the car. The distinction matters because unsecured debt is exactly what bankruptcy was built to discharge. The card company cannot take anything back; its only remedies are collection calls, selling the account to a debt buyer, or suing you for a judgment. Bankruptcy ends all three.
Minimum payments on a balance at a typical card rate barely touch the principal, and a family carrying several cards can pay for years without the balance moving. When payments stop, the account is charged off, sold to a debt buyer, and eventually the subject of a collection lawsuit in Lake or St. Joseph County small claims or circuit court. A judgment allows the creditor to garnish wages and bank accounts. Many of the garnishment calls we receive started as a credit card nobody could keep up with.
Chapter 7 discharges credit card debt completely in about three to four months. Chapter 13 folds it into a plan where unsecured creditors share whatever disposable income the budget shows, often cents on the dollar, with the balance discharged at the end. Outside bankruptcy there are settlements and debt-management plans, and we will tell you when one of those is the better path. What we do not recommend are the for-profit “debt relief” companies that advertise on television; many of them collect fees for months while your accounts go into default and get sued.
The Bankruptcy Code lets a card company challenge the discharge of large purchases of luxury goods or large cash advances taken shortly before filing, on the theory that you never intended to repay them. If you are considering bankruptcy, stop using the cards and talk to us before you make any unusual charge. We will time the filing so that nothing you did in the months before it can be used against you.
Third-party collectors are governed by the Fair Debt Collection Practices Act. They cannot call before 8 a.m. or after 9 p.m., cannot call you at work after you tell them not to, cannot threaten action they cannot take, and must stop contacting you if you demand it in writing. Collection lawsuits on an old card must also be filed within the statute of limitations. Debt buyers routinely sue on accounts they cannot document and on debts that are too old; those suits can be beaten without bankruptcy, and we look at that first.
The first meeting is free, in person at either office or by phone or video. Bring whatever you have: bills, collection letters, pay stubs, a tax return if it is handy. We go through the whole picture, tell you whether bankruptcy is the right tool and which chapter, and quote a flat fee with a payment plan. Nothing is filed until you are comfortable with the plan. More about how we handle bankruptcy cases.
Admitted to the Indiana bar at 24, the youngest licensed attorney in the state at the time, Miguel pairs that early start with more than fifteen years helping Northwest Indiana families through injury claims and bankruptcy.
In a Chapter 7, yes, with narrow exceptions for recent luxury purchases or cash advances and for charges a creditor can prove were fraudulent. In a Chapter 13 the cards are paid what the plan allows and the rest is discharged.
No. Every creditor must be listed, and a card with a balance will be closed. Most clients are offered new secured or starter cards within months of the discharge, which is the right way to rebuild.
No. Filing bankruptcy stops a pending collection lawsuit and stops a garnishment that has already started. The sooner you call, the less is taken from your paycheck in the meantime.
Usually not. Settlement companies tell you to stop paying while you fund an account they control, and accounts in default get sued. We will tell you honestly whether a negotiated settlement makes sense for you, and we can negotiate it ourselves.
Call either office or send a message. We will tell you plainly whether bankruptcy is the right tool, and which one.