Yes, you can include credit card debt in bankruptcy, and it's one of the most common reasons people file
Credit card debt is unsecured debt, which means the card company has no claim to your car, home, or other possessions if you stop paying. Because of this, credit cards are among the easiest debts to discharge—or eliminate—through bankruptcy. When you file, you list all your credit cards as debts the court should consider, and depending on which type of bankruptcy you choose, those balances may be wiped out entirely or reorganized into a repayment plan you can actually afford.
The catch is that bankruptcy itself carries real costs: it damages your credit score for years, closes your accounts, and requires you to disclose your entire financial life to the court. It's also not automatic—you have to meet certain requirements, and the court will examine whether you genuinely cannot pay or whether you're trying to escape debt you could manage. Understanding how bankruptcy actually works with credit cards helps you decide whether it makes sense for your situation, or whether other options might work better.
Key Takeaways
- Credit card debt can be discharged through Chapter 7 bankruptcy (eliminated entirely) or reorganized through Chapter 13 bankruptcy (paid back over three to five years at a reduced rate).
- You must pass a means test, which compares your income to your state's median income, to determine which chapter you're allowed to file under.
- Bankruptcy stops collection calls and lawsuits when ready through an automatic stay, but it will lower your credit score and remain on your credit report for seven to ten years.
- You must complete credit counseling before filing and a financial management course after, both of which cost money and take time.
- Some credit cards may not be discharged if the card company successfully argues the debt was incurred through fraud or if you made large cash advances or purchases shortly before filing.
Chapter 7 versus Chapter 13: Which one eliminates credit card debt
Chapter 7 bankruptcy is a liquidation: the court appoints a trustee to sell any assets you own that aren't protected by exemptions, and the money goes to pay creditors. Credit card debt is typically unsecured, so it sits at the bottom of the payment priority—after secured debts like mortgages and car loans, and after priority debts like taxes and child support. In most Chapter 7 cases, there's nothing left to sell after exemptions, so credit card balances are straightforward discharged. You walk away owing nothing.
Chapter 13 bankruptcy is a reorganization: you propose a repayment plan to the court that lasts three to five years. You make one monthly payment to a trustee, who distributes it to your creditors according to the plan. Credit cards are unsecured, so they're paid only after secured debts and priority debts. The plan might pay them back at 10 cents on the dollar, or sometimes nothing at all—whatever you can afford. At the end of the plan period, any remaining credit card balance is discharged.
Chapter 7 is faster (usually four to six months from filing to discharge) and wipes out debt completely, but you must pass a means test showing your income is below your state's median. Chapter 13 takes longer but is available to people with higher incomes, and it lets you keep your home or car while you catch up on missed payments. The choice depends on your income, what assets you own, and whether you have other debts like a mortgage or car loan you want to keep.
The means test: Why your income determines which chapter you can file
Before you can file Chapter 7, you must pass the means test, a calculation that compares your household income over the past six months to your state's median income for a household your size. If your income is below the median, you pass automatically and can file Chapter 7. If your income is above the median, the test continues: it subtracts allowed expenses (housing, food, transportation, taxes) from your income. If what's left over is small enough, you still pass. If it's large, the court assumes you have money to pay creditors and may deny your Chapter 7 petition or convert it to Chapter 13.
The median income varies by state and household size—a single person in Mississippi has a different threshold than a family of four in Massachusetts. You can find your state's current median on the U.S. Courts website, which updates it regularly. The means test is not a judgment about whether you're a good person or whether you "deserve" bankruptcy; it's a mechanical rule designed to push higher-income filers toward Chapter 13 repayment plans instead.
If you fail the means test, you're not shut out of bankruptcy. You can file Chapter 13 instead, which has no income limit. You can also wait a few months if your income has recently dropped—the means test uses the six months before you file, so a job loss or reduction in hours can change the outcome.
What happens to your credit cards when you file
The moment you file bankruptcy, an automatic stay goes into effect. This is a court order that stops creditors from calling you, suing you, garnishing your wages, or foreclosing on your home—when ready. Collection calls stop. Lawsuits pause. If a creditor violates the stay, you can sue them for damages. This breathing room is one reason people file: it halts the spiral of calls and legal threats long enough to get organized.
Your credit card accounts are frozen. You cannot use them during bankruptcy, and the card companies will close them. After discharge (in Chapter 7) or after you complete your repayment plan (in Chapter 13), the accounts remain closed, but you're no longer liable for the balances. Your credit report will show the accounts as "discharged in bankruptcy," which is a negative mark, but it's better than showing unpaid balances or charge-offs.
Your credit score will drop significantly—often 130 to 200 points or more—when you file. The damage is heaviest in the first two years. After that, the impact gradually lessens, though the bankruptcy itself stays on your report for seven years (Chapter 7) or ten years (Chapter 13). You can rebuild credit during and after bankruptcy by getting a secured credit card, making on-time payments, and keeping credit utilization low.
Debts that may not be discharged, even in bankruptcy
Most credit card debt is discharged in bankruptcy, but there are exceptions. If the card company can show you committed fraud—for example, you opened the card with no intention of paying, or you made purchases you knew you couldn't afford right before filing—they can object to the discharge. The burden is on them to prove fraud, and courts set a high bar, but it happens.
Large cash advances or purchases made within 90 days of filing may also be challenged. If you took a $5,000 cash advance or spent $5,000 on luxury goods in the weeks before filing, the card company might argue those transactions show you knew you were about to discharge the debt and acted in bad faith. Again, they have to object and prove it, but the risk exists.
If you owe a credit card debt that's also a judgment—meaning the card company sued you and won—the judgment itself is discharged, but the underlying debt is still gone. The discharge wipes out the judgment's enforceability. You won't owe the debt after bankruptcy, but the judgment may remain on your credit report for a time.
The cost and time required to file bankruptcy
Bankruptcy is not free. You must pay court filing fees (currently $338 for Chapter 7 and $313 for Chapter 13 as of 2024, though these amounts change), and you must hire a bankruptcy attorney in most cases. Attorney fees vary widely by location and complexity—typically $1,000 to $2,500 for a straightforward Chapter 7 case, and $2,500 to $6,000 for Chapter 13, which involves negotiating a repayment plan. Some attorneys offer payment plans or reduced fees for low-income filers.
You must also complete two mandatory courses: a credit counseling course before you file (usually $50 to $100) and a financial management course after (also $50 to $100). These are not optional, and you cannot get a discharge without certificates proving you completed them. Most courses are online and take a few hours.
Timeline varies. Chapter 7 typically takes four to six months from filing to discharge. Chapter 13 takes three to five years to complete the repayment plan, though you get the automatic stay when ready. During Chapter 13, you're making monthly payments, so you're not debt-free until the plan ends.
Alternatives to bankruptcy for credit card debt
Bankruptcy is powerful, but it's not the only option. Debt consolidation combines multiple credit card balances into a single loan, usually at a lower interest rate, which can make payments manageable. Debt settlement involves negotiating with card companies to pay a lump sum—often 40 to 60 percent of the balance—to close the account. Credit counseling through a nonprofit agency can help you create a budget and sometimes negotiate lower interest rates or waived fees directly with creditors.
These alternatives don't eliminate debt the way bankruptcy does, but they also don't damage your credit as severely or last as long on your report. They work best if you have some income and can make payments, even if they're smaller than the minimum. If you have no income, no assets, and no realistic way to pay, bankruptcy may be the only real option.
A bankruptcy attorney can review your situation and tell you whether bankruptcy makes sense or whether another path is stronger. Many offer free initial consultations. If cost is a barrier, legal aid organizations in your area may provide free or low-cost representation if you meet income limits.
Frequently Asked Questions
Will bankruptcy eliminate all my credit card debt?
In Chapter 7, yes—credit card debt is unsecured and typically discharged completely. In Chapter 13, your credit card balances are included in the repayment plan and any remaining balance is discharged after you complete the plan. The only exceptions are if the card company successfully objects on grounds of fraud or if you made large cash advances or purchases very close to filing.
Can I keep one credit card and not include it in bankruptcy?
No. Bankruptcy requires you to list all debts, including all credit cards. You cannot pick and choose which debts to discharge. If you want to keep a card open and continue paying it, you would not file bankruptcy on that debt—but if you file bankruptcy at all, you must disclose it to the court.
How long does bankruptcy stay on my credit report?
Chapter 7 bankruptcy stays on your credit report for seven years from the filing date. Chapter 13 stays for ten years. After that time, it falls off automatically. You can rebuild credit during those years by making on-time payments on other accounts and keeping balances low.
What if I file bankruptcy and then get a new credit card offer?
After bankruptcy, you'll likely receive credit card offers, often for secured cards (which require a cash deposit) or cards with high interest rates. These are normal. You can use them to rebuild credit, but be cautious about taking on new debt before you've stabilized your finances. The goal is to show lenders you can manage credit responsibly going forward.
Can my employer find out I filed bankruptcy?
Bankruptcy is public record, so technically anyone can find it. However, employers cannot legally fire you for filing bankruptcy, and most do not routinely check. The automatic stay prevents wage garnishment, so your employer won't be contacted by creditors. Your paycheck itself is protected.