Drowning in high-interest credit card debt? You’re not alone—Americans owe an average of $6,200 in credit card balances.

When minimum payments just cover interest, getting out of debt can seem hopeless. And while bankruptcy may feel like a perfect instant reprieve, it can have lifelong consequences.

The reason? It damages your credit health for years.

This article breaks down everything you need to know about discharging credit card debt through bankruptcy. It covers which types of bankruptcy eliminate credit card debt, the pros and cons of each, steps to file...

... and most important, alternatives to explore first.

Which bankruptcy types clear credit card balances?

Not all bankruptcies fully discharge credit card debt. The two main options are Chapter 7 and Chapter 13.

Chapter 7 bankruptcy

Chapter 7 wipes out eligible unsecured debts like credit cards. The balances get discharged—creditors can’t collect on them anymore.

It’s the quickest, most drastic bankruptcy type. The whole process usually wraps up within six months.

Here’s the catch: you may have to forfeit assets beyond what your state exempts from liquidation. This could include property like:

  • A second car
  • Valuable electronics
  • Cash accounts
  • Investment holdings

You can’t just easily qualify for Chapter 7. You must pass a strict “means test” based on income, family size, and where you live. Fall below your state’s median income? Chapter 7 is a possibility.

Exceed it, and your case could get converted to Chapter 13 instead.

Chapter 13 bankruptcy

Chapter 13 is less intense than Chapter 7 but still relieves credit card debt. It restructures (doesn’t erase) what you owe through a 3-5 year repayment plan.

Each month you contribute disposable income toward outstanding bills. Once completed, any remaining balances get discharged.

Chapter 13 works for those who fail the Chapter 7 means test or want to avoid liquidating assets. But it also has strict eligibility requirements—like caps on secured debt amounts.

Debts qualifying for Chapter 13 discharge include:

  • Credit card balances
  • Medical bills
  • Personal loans
  • Past-due utility bills
  • Most tax debts

The court must approve your repayment plan based on projected income. Creditors can object if they believe the terms are unfair.

Weighing the pros and cons of bankruptcy

Eliminating credit card debt through bankruptcy—especially Chapter 7—can feel like a lifeline. But you must carefully weigh the pros and cons.


  • Immediate financial relief
  • Chance to rebuild credit in 7-10 years
  • Protection from creditor harassment
  • Keep assets exempt from liquidation
  • Automatic freeze on collections


  • Damaged credit for up to 10 years
  • Higher borrowing costs
  • Potential asset liquidation
  • Difficulty getting new credit
  • Average $1,200-$1,500 legal fees

Consider your unique situation. Bankruptcy tends to work best as a last option when you simply can’t stay afloat. If you now earn more than you spend, alternatives may suffice.

Steps to file bankruptcy on credit cards

If you decide bankruptcy is your best path forward, here are the key steps:

1. Research thoroughly

Talk to a bankruptcy attorney and credit counselor first about options beyond bankruptcy. If you still want to file, an attorney can help navigate the complex process.

2. Get mandatory credit counseling

You need credit counseling no more than 180 days before filing. You'll also need a debtor education course at the end of your case.

3. Pick where to file

You can file in federal court based on where you live or do business. Exemption laws vary by state, so ask an attorney what venue works best.

4. Prepare paperwork

Your attorney will help compile the necessary forms detailing income, debts, assets, expenses—accuracy is critical.

5. File and attend the creditors meeting

All creditors receive notice after submitting your petition and paying the fee ($338 for Chapter 7). Within roughly 40 days, you'll attend a meeting where the trustee and creditors can ask financial questions.

6. Deal with any disputes

Creditors may object if they believe you're hiding assets or improperly exempting property. Disputes also come up when creditors feel a Chapter 13 repayment plan is unfair. Contested issues lead to legal proceedings.

Having an experienced bankruptcy attorney makes navigating the lengthy, complex process much smoother.

Alternatives to discharging credit card Debt

Consider these options before making bankruptcy your last resort:

Debt management plans (DMPs)

A DMP consolidates unsecured debts into one monthly payment, often with reduced interest rates. Nonprofit credit counseling agencies negotiate lower balances with creditors and distribute your monthly contributions.

DMPs help avoid bankruptcy but still appear on your credit reports and can lower scores 65-125 points. Expect to pay around $30 per month for their services.

Debt settlement

Debt settlement companies negotiate lump sum payoffs discounted 40-60% of your balances. Rather than paying monthly, you save up to make settlement offers later.

This severely damages credit—initially up to 100 points—and leaves you vulnerable to collections in the interim. It works best for those already behind on payments.

Balance transfer cards

Transferring high-interest credit card balances to a 0% intro APR card lets you pay down principal faster sans interest. Just beware of transfer fees, typically 3-5% of the total balance.

This requires decent enough credit for approval. And you must pay off the full transferred balance before the 0% rate expires.

Credit counseling

Nonprofit credit counseling offers budget help, resources on prudent management, and guidance beyond DMPs—take advantage before pursuing bankruptcy.

Rebuilding credit post-bankruptcy takes diligence. Prioritize on-time payments, low utilization, and limiting new credit. With good financial behavior, your scores and options will gradually rebound.

While promising instant relief, understand bankruptcy's lasting impacts before proceeding. For most, it should come only after exhausting all other debt repayment and credit-boosting alternatives.

But for some, it truly does provide the fresh start needed to regain control.