Can You File Bankruptcy on Credit Card Debt? (Yes, Here’s How)
If credit card debt is burying you, you may be wondering whether bankruptcy can wipe it out. The short answer: yes. Credit card debt is one of the most common types of debt discharged through bankruptcy — particularly Chapter 7.
But there are rules, qualifications, and important things to understand before you go down that road.
What Types of Bankruptcy Apply?
Chapter 7 bankruptcy is the most common for credit card debt. It discharges (eliminates) most unsecured debt, including credit cards, within 3–6 months. The catch: you must pass a “means test” showing your income is below a certain threshold for your state.
Chapter 13 bankruptcy doesn’t eliminate debt immediately — it restructures it into a 3–5 year repayment plan. At the end, any remaining eligible debt is discharged. This is better for people who have regular income and want to keep assets like a home.
What Credit Card Debt CAN’T Be Discharged?
Not all credit card charges can be wiped in bankruptcy. Exceptions include:
- Luxury goods or services over $725 purchased within 90 days of filing
- Cash advances over $1,000 taken within 70 days of filing
- Charges made with the intent to defraud (courts rarely pursue this, but it exists)
Regular everyday spending — groceries, gas, bills — is almost always dischargeable.
The Bankruptcy Process (Simplified)
- Take a required credit counseling course (usually $10–$50 online)
- File bankruptcy petition with your local federal court
- Automatic stay goes into effect — all collection calls and lawsuits must stop immediately
- Meet with bankruptcy trustee (brief, routine meeting)
- Debts discharged in 3–6 months (Chapter 7)
What Happens to Your Credit Cards?
Your existing credit card accounts will be closed when you file — even cards with a zero balance. Issuers monitor bankruptcy filings and close accounts automatically. You’ll need to rebuild credit afterward using secured cards (see our credit rebuilding guide).
Is Bankruptcy Right for You?
Bankruptcy is a serious decision with long-lasting credit consequences (7–10 years on your report). But for people with no realistic path to repaying their debt, it’s a legal fresh start that exists for exactly that reason.
Before filing, consider getting a free consultation with National Debt Relief to compare debt settlement as an alternative — it may have less impact on your credit while achieving similar results.