Credit Card Discharge and Bankruptcy
When a person files for bankruptcy, if successful, many of his debts will be discharged. Among them, some type of a credit card discharge will almost always be at the top of the list of dischargeable debts. This is one reason why many creditors will try to settle before a person files for bankruptcy.
In a typical bankruptcy case, the debtor will have most of his assets taken and liquidated for what they will bear. The proceeds of these assets will then be distributed among the creditors – including credit card companies. All remaining debts will be discharged leaving the debtor free and clear of financial obligations.
If the credit card company can prove that fraud was perpetrated in applying for their credit card and taking advantage of its benefits, the court may rule that the amount owed is not discharged – and the debtor will still owe the credit card company. In other cases, however, the credit card company is out of luck.
