Yes, you can include credit card debt in bankruptcy, and it is one of the most common reasons people file

Credit card debt can be discharged — legally erased — through bankruptcy in most cases. When you file for bankruptcy, credit card balances become part of your estate, and the court process determines what happens to them. In a Chapter 7 bankruptcy, unsecured debts like credit cards are typically wiped out entirely. In a Chapter 13 bankruptcy, you enter a repayment plan that may pay some or none of the credit card balance, depending on your income and other debts.

The catch is that bankruptcy has serious consequences for your credit report and your ability to borrow for years afterward. It is not a simple erase button — it is a legal process that takes months, costs money upfront, and leaves a mark on your financial record. Understanding what actually happens to your credit cards in each type of bankruptcy, and what your alternatives might be, matters before you decide to file.

Key Takeaways

  • Chapter 7 bankruptcy typically erases credit card debt entirely, but you must pass a means test based on your income, and you may lose non-exempt assets.
  • Chapter 13 bankruptcy puts you on a three- to five-year repayment plan, during which you pay what you can afford while creditors cannot contact you or sue.
  • Credit card companies can object to discharge in rare cases — usually when they claim fraud or very recent charges — but most objections fail.
  • A bankruptcy filing stops collection calls and lawsuits immediately through an automatic stay, even before the court decides what happens to your debt.
  • Alternatives like debt settlement, credit counseling, or a debt management plan may lower your debt without the long-term credit damage bankruptcy causes.

How Chapter 7 bankruptcy treats credit card debt

In Chapter 7, you file paperwork listing all your debts, assets, and income. A bankruptcy trustee is assigned to your case. If you pass the means test — a calculation that compares your income to the median income in your state — you can proceed. The trustee may sell non-exempt assets (like a second car or investment accounts) to pay creditors, but most people's assets are protected by exemptions under state or federal law.

Credit card debt is unsecured, meaning the card company has no claim to your home, car, or other property. This makes it one of the easiest debts to discharge in Chapter 7. Once the court grants your discharge, usually three to four months after filing, those credit card balances are gone. The card company cannot pursue you for the debt afterward, and the debt cannot appear as an active account on your credit report after a certain period.

The trade-off is that Chapter 7 stays on your credit report for ten years, and your credit score drops significantly — often by 130 to 200 points or more. You will find it harder to get new credit, and when you do, interest rates will be higher. Some employers and landlords also check credit reports, though laws limit how they can use bankruptcy information.

How Chapter 13 bankruptcy treats credit card debt

Chapter 13 is a reorganization, not a liquidation. You propose a repayment plan to the court that lasts three to five years. During that time, you make one monthly payment to a trustee, who distributes the money to your creditors according to the plan. Credit card debt is unsecured, so it ranks lower in priority than secured debts (like a mortgage) and certain other debts (like child support or recent taxes).

In many Chapter 13 cases, credit card debt is paid only partially or not at all, depending on how much disposable income you have after paying priority debts and living expenses. If your plan pays credit cards at 30 percent of what you owe, the remaining 70 percent is discharged when you complete the plan. The key advantage is that creditors cannot contact you, sue you, or garnish your wages while you are in the plan — the automatic stay protects you from collection activity.

Chapter 13 also stays on your credit report for seven years (shorter than Chapter 7), and the damage to your credit score is often less severe because you are repaying rather than erasing the debt. However, the plan is strict: if you miss payments or your circumstances change significantly, the trustee can ask the court to dismiss your case, leaving you unprotected and still owing the debt.

What happens immediately after you file

The moment you file for bankruptcy, an automatic stay goes into effect. This is a court order that stops most collection activity instantly — no more calls from credit card companies, no more lawsuits, no more wage garnishment. The stay applies to all your debts, not just credit cards. Creditors who violate the stay can be held in contempt of court and ordered to pay damages.

The automatic stay does not erase your debt; it simply pauses collection efforts while the bankruptcy process moves forward. In Chapter 7, the stay lasts until your discharge is granted. In Chapter 13, it lasts for the entire length of your repayment plan. If a creditor files a motion to lift the stay — arguing, for example, that you have equity in a home they want to foreclose on — the court may grant it, but this is uncommon for credit card debt.

When credit card companies can object to discharge

Credit card companies rarely object to discharge, but they can file a complaint if they believe you obtained the debt through fraud. Common grounds include claiming you made charges you knew you could not pay, or that you used the card fraudulently (someone else's card, for instance). The burden of proof is on the card company, and courts are skeptical of these claims unless there is clear evidence.

Charges made within 90 days before filing for bankruptcy are sometimes presumed to be fraudulent if they are for luxury goods or cash advances, but this presumption can be rebutted. If the card company proves fraud, that specific debt may not be discharged, but the rest of your credit card balances still are. In practice, most credit card companies do not pursue objections because the cost of litigation outweighs the recovery.

Alternatives to bankruptcy for credit card debt

Bankruptcy is not the only option. Debt settlement involves negotiating with the card company to pay a lump sum — often 40 to 60 percent of what you owe — in exchange for closing the account and forgiving the rest. This damages your credit but less severely than bankruptcy, and it happens faster. However, the forgiven amount may be taxable income, and the card company is not required to settle.

A debt management plan through a nonprofit credit counseling agency can lower your interest rates and consolidate payments into one monthly amount. You pay off the full balance over three to five years, but without the legal protection of bankruptcy. Credit counseling itself is free or low-cost through agencies accredited by the National Foundation for Credit Counseling.

Debt consolidation — taking out a personal loan to pay off credit cards — works if you can may have access to for a lower interest rate. You then owe the loan instead of the cards. This does not erase debt, but it can lower your monthly payment and interest cost. None of these alternatives carry the long-term credit damage of bankruptcy, but they also do not stop collection activity or provide the legal protection of an automatic stay.

The cost and timeline of filing for bankruptcy

Filing for bankruptcy requires paying court fees and attorney fees. Court filing fees are set by federal law: $335 for Chapter 7 and $310 for Chapter 13 as of 2024, though these amounts can change. Attorney fees vary widely by location and complexity, typically ranging from $1,000 to $3,000 for Chapter 7 and $2,500 to $6,000 for Chapter 13. Some attorneys offer payment plans.

You must also complete credit counseling from an approved agency before filing and financial management education after filing. These courses cost $50 to $100 each and can often be done online. The entire Chapter 7 process takes three to four months from filing to discharge. Chapter 13 takes the full length of your repayment plan — three to five years — plus a few months for the court to confirm the plan.

Frequently Asked Questions

Will bankruptcy erase all my credit card debt?

In Chapter 7, yes, almost always. In Chapter 13, it depends on your income and other debts — you may pay back a portion while the rest is discharged. Credit card companies rarely succeed in objecting to discharge, so the debt is typically erased unless fraud is proven.

Can I keep one credit card and not include it in bankruptcy?

No. You must list all debts in your bankruptcy petition. If you try to hide a credit card or pay it off right before filing, the trustee can reverse the payment and include the debt in the bankruptcy. You cannot pick and choose which debts to discharge.

How long does bankruptcy stay on my credit report?

Chapter 7 stays for ten years; Chapter 13 stays for seven years. However, the impact on your credit score fades over time, especially if you build positive credit history after discharge. Many people rebuild their credit within three to four years of filing.

Will I be able to get a credit card after bankruptcy?

Yes, but it will likely be a secured card requiring a cash deposit, with a higher interest rate. Some card companies specifically market to people rebuilding credit after bankruptcy. You can usually get a secured card within a year of discharge.

What if I file bankruptcy and then get sued by a credit card company?

If you file before the lawsuit is filed, the automatic stay stops it. If you are already being sued, filing bankruptcy stops the case immediately. The debt becomes part of your bankruptcy estate and is handled through the bankruptcy process instead of the lawsuit.