Can You File Bankruptcy on Credit Cards? Chapters 7 & 13

Yes, filing bankruptcy on credit card debt is one of the most reliable ways to eliminate it. Credit cards are unsecured debt, which puts them at the bottom of the payment ladder and makes them highly dischargeable under both Chapter 7 and Chapter 13. Once the court enters your discharge order, the card issuer can no longer sue you, call you, or garnish your wages to collect the balance.¹

Why Credit Card Balances Are So Easy to Discharge

A credit card issuer has no lien on your house, your car, or anything else. Nothing secures what you owe.² In bankruptcy, that puts credit card balances into the “nonpriority unsecured” bucket. Priority claims like certain taxes and support obligations get paid first, secured creditors get paid from their collateral, and card companies come last, often receiving little or nothing from the estate.³

The discharge itself works as a permanent injunction. The legal obligation to repay is extinguished, and any attempt by the creditor to keep collecting violates federal law.¹

Chapter 7 or Chapter 13 for Credit Card Debt

Consumers with credit card debt generally choose between two chapters. They eliminate debt through different mechanics and on very different timelines.

Chapter 7

Chapter 7 is a liquidation. A trustee reviews your assets for anything non-exempt that could be sold to pay creditors, but in most consumer cases exemptions cover everything the filer owns, and unsecured creditors receive nothing. The case moves quickly: filing to discharge usually takes four to six months, and every listed credit card balance is wiped out at the end. You cannot receive another Chapter 7 discharge for eight years after your filing date.⁴

Not everyone qualifies. Chapter 7 has an income screen called the means test. If your household income over the six months before filing is below your state’s median for your family size, you generally qualify. If it exceeds the median, the second part of the test subtracts allowed monthly expenses based on IRS standards; if enough disposable income remains to repay a meaningful portion of unsecured debt over 60 months, the court presumes filing Chapter 7 would be an abuse.⁵ In that situation, Chapter 13 is still available.

Chapter 13

Chapter 13 does not liquidate; it reorganizes. You propose a repayment plan running three to five years, with monthly payments sent to a trustee who distributes the money to creditors in priority order. Below-median filers can use a three-year plan; above-median filers generally must run five years, and no plan exceeds five years.³ Payments must begin within 30 days of filing, even before the plan is formally approved.

Because credit card debt is nonpriority unsecured, it gets paid only after secured and priority claims are satisfied. Many filers pay pennies on the dollar on their cards during the plan, and any balance still unpaid when the plan ends is discharged.⁶

Credit Card Charges the Discharge Won’t Cover

Federal law carves out specific charges to prevent people from running up a card in the weeks before filing. These charges are presumed nondischargeable, meaning if the creditor objects, you carry the burden of showing there was no fraudulent intent.⁷

Luxury goods or services totaling more than $900 charged to a single creditor within 90 days before filing. Items reasonably necessary for you or your dependents — groceries, medicine, basic clothing — generally don’t count as luxury.
Cash advances totaling more than $1,250 taken within 70 days before filing.
Any credit card debt obtained through fraud, misrepresentation, or a false written statement about your finances. Lying about income on a credit application is the classic example.

The dollar thresholds create a presumption, not an automatic denial. If no creditor files an objection, even charges that fall inside these windows can be discharged along with everything else.

What You Have to Do Before and During Filing

Two Required Courses

Federal law requires two financial courses, and skipping either one blocks your discharge. The first is a credit counseling briefing taken within 180 days before filing, from an agency approved by the U.S. Trustee Program (or the Bankruptcy Administrator in Alabama and North Carolina). The certificate is filed with your petition.⁸ A temporary waiver is possible in urgent circumstances, but the course must still be completed within 30 days of filing.⁹

The second is a personal financial management course taken after filing. In Chapter 7, the certificate must be filed within 60 days after the first date set for the meeting of creditors. In Chapter 13, it must be filed before your final plan payment.¹⁰ Miss the deadline and the court closes the case without entering a discharge.

List Every Card

Every account you want discharged must appear on Schedule E/F, with the creditor’s name, mailing address for legal notices, account number, and balance as of the filing date.¹¹ Pull your credit reports before you file. A balance sold to a collection agency may show up under a different name than the original issuer, and any account you fail to list may survive the bankruptcy.

The Automatic Stay and the 341 Meeting

The instant you file, an automatic stay stops virtually all collection activity — calls, lawsuits, wage garnishments, everything tied to pre-filing debt.¹² The clerk sends formal notice to every creditor you listed. You then attend a meeting of creditors (the 341 meeting), where the trustee examines you under oath about your finances.¹³ Card companies have the right to attend but rarely do.

Watch-Outs Before You File

Don’t Pay Down One Card in a Rush

If you make a large payment on one credit card in the 90 days before filing, the trustee can claw that money back and redistribute it among all unsecured creditors. Federal law treats such transfers as preferential when they give one creditor more than it would have received through the bankruptcy.¹⁴ Regular monthly minimum payments made in the ordinary course are generally safe. The lookback stretches to one year for insiders like family members.

Co-Signers and Joint Account Holders Stay Liable

Your discharge eliminates your obligation, not anyone else’s. Under Chapter 7, the card issuer can pursue a co-signer or joint account holder for the full balance during and after your case. Chapter 13 adds a codebtor stay that generally blocks collection against co-signers on consumer debts while the case is active, though a creditor can ask the court to lift it if the plan does not propose to pay the debt in full, or if the co-signer received the benefit of the credit. The codebtor stay ends immediately if the case is dismissed or converted to Chapter 7.¹⁵

Think Twice About Reaffirming a Card

A reaffirmation agreement is a voluntary contract to remain personally liable on a debt despite the bankruptcy. It must be signed before discharge and can be rescinded any time before discharge or within 60 days after it is filed with the court, whichever is later.¹ Reaffirming a credit card is rarely worthwhile. Unlike a car loan, where reaffirmation lets you keep the vehicle, there is no collateral to protect. If you reaffirm and later fall behind, you owe the full balance with no bankruptcy shield left.

What Filing Costs

The court charges $338 to file Chapter 7 ($245 filing fee, $78 administrative fee, $15 trustee surcharge) and $313 to file Chapter 13 ($235 filing fee, $78 administrative fee). Chapter 7 filers whose household income is below 150% of the federal poverty line can request a full fee waiver. Both chapters allow installment payments for filers who qualify.

The two required courses typically run $10 to $50 each. Attorney fees are the largest expense: roughly $600 to $3,000 for a Chapter 7 case and roughly $1,800 to $7,500 for Chapter 13. Chapter 13 attorney fees are often folded into the repayment plan, so you don’t need to pay the full amount upfront. Filing without a lawyer (pro se) is legal but raises the risk of errors on the means test, schedules, and procedural deadlines that can delay or defeat your discharge.

What Happens to Your Credit Afterward

A bankruptcy filing appears on your credit report for up to 10 years from the filing date.¹⁶ While the statute sets a 10-year ceiling for all cases, the major credit bureaus commonly remove completed Chapter 13 filings after seven years as an industry practice.

The hit to your score is heaviest at first and fades over time. Once Chapter 7 discharge arrives (usually four to six months after filing), you are legally free to apply for new credit right away. Secured cards, which require a cash deposit equal to the credit limit, are a common starting point. Consistent on-time payments on new accounts improve your score gradually even while the bankruptcy notation is still on your report.

1
Office of the Law Revision Counsel. 11 USC 524 – Effect of Discharge
2
United States Bankruptcy Court Northern District of Oklahoma. How Do I Know if a Debt Is Secured, Unsecured, Priority, or Administrative
3
United States Courts. Chapter 13 – Bankruptcy Basics
4
Office of the Law Revision Counsel. 11 USC 727 – Discharge
5
Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
6
Office of the Law Revision Counsel. 11 USC 1328 – Discharge
7
Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
8
Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor
9
United States Courts. Credit Counseling and Debtor Education Courses
10
U.S. Department of Justice. Post-Filing Debtor Education Required
11
United States Courts. Official Form 106E/F Schedule E/F – Creditors Who Have Unsecured Claims
12
Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay
13
Office of the Law Revision Counsel. 11 USC 341 – Meetings of Creditors and Equity Security Holders
14
Office of the Law Revision Counsel. 11 USC 547 – Preferences
15
Office of the Law Revision Counsel. 11 USC 1301 – Stay of Action Against Codebtor
16
Office of the Law Revision Counsel. 15 USC 1681c – Requirements Relating to Information Contained in Consumer Reports