Credit Cards and Bankruptcy

Credit cards have made many things in life much easier to do. They provide an excessive amount of credit allowing a person to purchase something he or she can’t afford all at once and pay it back over time. Credit cards as well as debit cards have reduced the need to pay for things completely in cash or by check all the time thereby speeding checkout lines and reducing the weight of a person’s wallet or pocket. Unfortunately, they have also contributed to a vast amount of over spending and many other evils.

Unlike mortgages and other loans, money “loaned” through credit cards can be discharged as a debt in bankruptcy proceedings without having to give up an item. With secured debts like mortgages and car loans, a person must give up his or her home if he or she defaults or wants the debt off of the books, but credit cards do not work in the same way. Nothing is given up if a person has debts tied to a credit card discharged in a bankruptcy proceeding.

This can be staved off, in some situations, by the lender stepping in and demanding that the credit card-based debts be paid back at least in part. Even when paid back in part, the debts still have the ability to hurt a person’s credit score, just like any bankruptcy proceeding does.

Furthermore, just when one finally gets out from under credit card debt, there is nothing preventing a person from overspending again and getting right back into trouble.

Contact an Austin Bankruptcy Attorney

If you find yourself in an unpleasant financial situation and are contemplating bankruptcy, contact the Austin bankruptcy lawyers of Slater Kennon & Jameson, LLP at 512-338-1100 for the legal advice you need.