Can I File Bankruptcy on Credit Cards and Keep My House? | FCW Legal (2023)

Can I File Bankruptcy on Credit Cards and Keep My House? | FCW Legal (1)
  • Bankruptcy

Can You Declare Bankruptcy on Credit Cards Only?

While credit card debt is a major reason people wind up filing for bankruptcy, you cannot file for bankruptcy on credit card debt alone, as the law requires that all your debts be listed in the bankruptcy documents. However, because bankruptcy can eliminate credit card and other unsecured debts, filing will often put you in a better financial position that allows you to keep your home.

Keeping a house is a major concern for most people filing for bankruptcy in Ohio, and there are several ways that bankruptcy can allow you to keep your house while discharging unsecured debt such as from credit cards. You will be able to keep your home if you can meet the requirements of the bankruptcy chapter that you choose, whether Chapter 7 or Chapter 13.

Bankruptcy laws are complicated, and our Ohio bankruptcy lawyer can help you choose the correct chapter and increase the chances of your being able to keep your home, car, and other assets. The skilled and compassionate Ohio debt relief attorneys at Fesenmyer Cousino Weinzimmer understand that even the most well-intentioned people can find themselves in financial difficulty.

Contact us to learn about your options for filing bankruptcy on credit cards while keeping your home. We offer a free consultation to evaluate your individual financial situation by looking at your debts, your income, and your goals and coming up with a debt-relief plan that’s best for you. Call us today at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) for your free consultation and to learn how we can help.

Can You File Bankruptcy on Credit Cards Only?

Credit cards are one of the easiest, but most expensive, ways to borrow, so it’s no wonder that credit card debt is a major reason for filing for bankruptcy. People who don’t pay credit cards off in a timely fashion or only pay the minimum balance often wind up in situations with interest rates that can reach almost 20 percent. With such a high interest rate, debt can snowball quickly, accumulate, and never get paid off. All debts must be listed in your bankruptcy petition when filed but you can reaffirm some debts to allow them to survive the bankruptcy process.

According to the CNBC, 43 percent of card holders carry a balance each month, and the Federal Reserve reports that outstanding card debt hit a record $1.023 trillion in November 2017. Rising credit card debt is a leading reason why Americans get into a financial hole and wind up being threatened with foreclosure on their homes.

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If you have reached the point where your credit card and other debt have become overwhelming, filing for bankruptcy may be your best option. Bankruptcy, a legal way to have many debts forgiven, can eliminate credit card and other unsecured debt, and may still allow you to keep your home.

How You Can Keep Your House Through Chapter 7 or Chapter 13 Bankruptcy

The most common types of consumer bankruptcy are Chapter 7 and Chapter 13. Once bankruptcy is filed, an automatic stay — an order from the bankruptcy court that prevents creditors from trying to collect while the court oversees the bankruptcy case — goes into effect. This automatic stay will stop foreclosure on your home, lawsuits, garnishments, and harassing collection calls. The stay lasts only until the bankruptcy proceedings are complete, but it will give you some breathing room; and if you can eventually continue to make mortgage payments, you will not lose your home.

1. Chapter 7 bankruptcy, is the most popular type of bankruptcy. It is quick and gives you a fresh start as it will eliminate many debts, including those for credit cards, and you usually can keep your home.

There are some reasons why you can lose your home or other property in Chapter 7. This can happen if:

  • you have stopped paying your mortgage or loan and cannot continue to pay it
  • your house is valued over the exemption limits for a Chapter 7

However, you will be able to keep your home if you have been making your payments and can continue to make them in the future. You may also be able to keep your house through using exemptions.

While your non-exempt property can be sold by a bankruptcy trustee to pay off your debt, Ohio has exemption laws that can protect certain types of property, including your home, clothing, cars, equipment used for work, and household furnishings. If all your property is exempt, you may qualify for a “no asset” bankruptcy. In this case, you can keep your home, your car, your pension, and more.

2. Chapter 13 bankruptcy allows you to consolidate payments to repay some or all of your debt in affordable monthly payments over a three- to five-year period. You do not have to come up with a lump sum to pay your past-due amounts, which are spread over the life of the Chapter 13 payment plan; once you successfully complete the plan, dischargeable debts covered by the plan are eliminated. If you can continue to make mortgage payments, you can keep your home rather than losing it to foreclosure.

Chapter 13 also provides a way to get caught up if you are behind in mortgage payments. You can propose a payment plan that treats mortgage arrearage as a separate debt and add it to your payment plan, but you must have enough income to make both your regular monthly mortgage payment and your plan payment while you’re in bankruptcy.

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With Both Chapter 7 and Chapter 13, You May Be Able to Keep Your Home

So, while Chapter 7 and Chapter 13 bankruptcy are different, both can allow you to keep your home. And, because credit card and other debts are eliminated, making mortgage payments after bankruptcy will be easier.

Be aware that exemption laws do not protect all property; a bankruptcy filing does not discharge all types of debts; and there are different classes of creditors that may be able to seize your property. The attorneys at Fesenmyer Cousino Weinzimmer understand each of these distinctions and can provide the best legal advice to protect your assets. Call us for help today.

Ask our Team about Filing Bankruptcy on Credit Cards, so You Can Keep Your Home

If debt is something you can no longer handle, take the first step toward relief by contacting the seasoned and compassionate Ohio debt-relief attorneys at Fesenmyer Cousino Weinzimmer. We offer a free initial consultation to evaluate your entire financial situation and determine the best fit for your particular circumstances. We will make sure you are aware of all your options to eliminate credit card and other debt and still keep your home. We will be there for you and walk you through the process every step of the way.

Delaying can only worsen your situation, so call one of our conveniently located office branches to set up your free consultation so we can determine what debt relief solutions will work best for you.

Call us today at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati).

Attorney Tom Fesenmyer

Attorney Thomas M. Fesenmyer (Tom) is dedicated to helping his clients solve their financial issues in a timely and cost-effective manner. Tom has personally filed several thousand cases and has the expertise to achieve immediate results for his clients, including stopping Foreclosures, Repossessions, Wage Garnishments, Law Suits, Utility Shut-offs, Creditor Harassment, Bank Attachments, and Pay-Day Loans. Tom’s goal for all of his clients is asset protection and debt elimination.[ Attorney Bio ]

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    Can I declare bankruptcy and keep my mortgage? ›

    If you have a mortgage or debt secured on your home

    You'll need to keep paying your mortgage and any other debts secured on your home - for example, debts secured with a charging order. If you fall behind with the payments, bankruptcy won't stop your mortgage lender from taking steps to repossess your home.

    Which bankruptcy is best for credit card debt? ›

    Chapter 7 bankruptcy is the fastest and most common form of bankruptcy. Chapter 7 bankruptcy erases most unsecured debts, that is, debts without collateral, like medical bills, credit card debt and personal loans.

    What should you not do when filing bankruptcy? ›

    What Not To Do When Filing for Bankruptcy
    1. Lying about Your Assets. ...
    2. Not Consulting an Attorney. ...
    3. Giving Assets (Or Payments) To Family Members. ...
    4. Running Up Credit Card Debt. ...
    5. Taking on New Debt. ...
    6. Raiding The 401(k) ...
    7. Transferring Property to Family or Friends. ...
    8. Not Doing Your Research.
    25 Aug 2022

    What will I lose if I file bankruptcy? ›

    You could lose assets of value

    Depending on which type of bankruptcy you qualify for, your income, the equity in your assets and other factors, you may lose your home, your car and other valuable items. Your trustee may be required to sell these items to repay your creditors.

    What debts Cannot be forgiven in bankruptcy? ›

    Filing for Chapter 7 bankruptcy eliminates credit card debt, medical bills and unsecured loans; however, there are some debts that cannot be discharged. Those debts include child support, spousal support obligations, student loans, judgments for damages resulting from drunk driving accidents, and most unpaid taxes.

    What debt doesn't go away with bankruptcy? ›

    Bankruptcy doesn't eliminate child support and alimony obligations. Child support and alimony obligations survive bankruptcy, so you'll continue to owe these debts in full, just as if you had never filed for bankruptcy. And if you use Chapter 13, you'll have to pay these debts in full through your plan.

    What debt is not forgiven in bankruptcy? ›

    Non-dischargeable Debts

    Some examples of debts that are typically not forgiven by Chapter 7 bankruptcy include the following: Student loans. Child support or alimony payments. Some taxes you owe.

    What are three negative effects of filing bankruptcy? ›

    Let's look at a few of the key issues.
    • Your Credit Score. The obvious negative to filing for bankruptcy is the negative impact it has on your credit score. ...
    • Your Credit Report. After you file for Chapter 7 or Chapter 13 bankruptcy, it will be reflected on your credit report for up to 10 years. ...
    • Your Future Employment.
    21 May 2017

    Why you should not declare bankruptcy? ›

    Your credit score will likely drop after filing for bankruptcy because it shows up on your credit report as a negative mark that can stay there for years after the discharge date (when all debts are finally discharged). Bankruptcy can also make it harder to get approved for loans or lines of credit.

    How long until bankruptcy is forgiven? ›

    The bankruptcy public record is deleted from the credit report either seven years or 10 years from the filing date of the bankruptcy, depending on the chapter you filed. Chapter 13 bankruptcy is deleted seven years from the filing date because it requires at least a partial repayment of the debts you owe.

    Does bankruptcy give you a fresh start? ›

    In a Chapter 7 bankruptcy, your assets (other than your exempt assets) are gathered together and sold. Any unsecured debt that isn't paid off from the sale proceeds is discharged, giving the debtor a debt-free fresh start. Traditionally, Chapter 7 has been the most common type of bankruptcy proceeding.

    How much does bankruptcy drop your score? ›

    According to FICO's damage points, the higher your starting score, the more points you'll lose for filing for bankruptcy. For a person with a credit score of 680, filing for bankruptcy will lower your score by 130-150 points. For a person with a score of 780, filing for bankruptcy will cost you 220-240 points.

    How much does your score drop after bankruptcy? ›

    Assessing the Damage

    If you know your score and file for bankruptcy, get ready to watch it plunge. A person with an average 680 score would lose between 130 and 150 points in bankruptcy. Someone with an above-average 780 score would lose between 200 and 240 points.

    What are 5 things that bankruptcy does not erase? ›

    Non-Dischargeable Debt in Bankruptcy
    • Debts left off the bankruptcy petition, unless the creditor actually knew of the filing.
    • Many types of taxes.
    • Child support or alimony.
    • Debts owed to a child or ex-spouse arising from divorce or separation.
    • Fines or penalties owed to government agencies.
    • Student loans.
    18 Oct 2021

    What is the #1 reason for bankruptcies? ›

    Medical Costs

    So many people fall behind on their medical bills, it accounts for 62% of all bankruptcies. In fact, the majority of bankruptcy filings related to medical bills came from individuals with health insurance!

    What type of bankruptcy is best? ›

    Most people prefer Chapter 7 bankruptcy because, unlike Chapter 13 bankruptcy, it doesn't require you to repay a portion of your debt to creditors. In Chapter 13 bankruptcy, you must pay your creditors all of your disposable income—the amount remaining after allowed monthly expenses—for three to five years.

    Can a creditor come after me after bankruptcy? ›

    Can a debt collector try to collect on a debt that was discharged in bankruptcy? Debt collectors cannot try to collect on debts that were discharged in bankruptcy. Also, if you file for bankruptcy, debt collectors are not allowed to continue collection activities while the bankruptcy case is pending in court.

    Does bankruptcy cover credit cards? ›

    You Can Eliminate Credit Card Debt by Filing for Bankruptcy

    Credit card debts are unsecured. This means they qualify for discharge when you file for Chapter 7 bankruptcy. Discharge means that once your case is complete, you'll no longer be legally obligated to pay the debts.

    How much does it cost to file bankruptcy? ›

    What Are the Bankruptcy Filing Fees?
    TypeFiling FeesEstimated Attorney Fees
    Chapter 7$338$1,300
    Chapter 13$313$3,000
    Chapter 11$1,738$10,000
    3 Aug 2022

    What happens to my house when my bankruptcy is over? ›

    What happens to my house when my bankruptcy is over? Your trustee will retain a legal interest in your house even after your bankruptcy ends. Trustees will regularly recalculate equity in a property to determine if there is value in selling the property to repay creditors.

    What happens to a house after bankruptcies? ›

    The trustee will sell property in the estate for the benefit of creditors. However, you don't lose everything you own. You can "exempt" or remove property from the estate your state determined is reasonably necessary to maintain a home and employment.

    How can I protect my home in bankruptcy? ›

    The federal government, as well as 42 states, have a homestead exemption that allows a person filing for bankruptcy to protect a certain amount of equity in a home. The federal exemption, which changes every three years, is $25,150 until April 2022. State exemptions may be higher or lower.

    Can my house be seized by creditor? ›

    If you own your home and have possessions that could be sold because they're not exempt from attachment, you could lose them if your creditor forces you to be made bankrupt.

    What debts are not covered by bankruptcy? ›

    Bankruptcy doesn't cover all debts, including:
    • court imposed penalties and fines.
    • child support & maintenance.
    • HECS & HELP debts (government student loans) ...
    • debts you incur after your bankruptcy begins.
    • unliquidated debts (e.g. a debt where you and your creditor are yet to determine the amount).

    How long do bankruptcies stay on your credit report? ›

    A Chapter 7 bankruptcy can stay on your credit report for up to 10 years from the date the bankruptcy was filed, while a Chapter 13 bankruptcy will fall off your report seven years after the filing date. After the allotted seven or 10 years, the bankruptcy will automatically fall off your credit report.


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