What Happens to Your Credit Cards After Filing Bankruptcy In Wyoming?

Filing for bankruptcy can be a significant step toward financial recovery for individuals struggling with overwhelming debt. Many people considering bankruptcy wonder what will happen to their credit cards once they file. In Wyoming, bankruptcy laws provide a structured process for dealing with credit card debt while helping individuals regain financial stability. Understanding how credit cards are treated during and after bankruptcy can help you make informed decisions about your financial future.

At Wiggam Law Office, LLC, we can provide legal assistance to the Cheyenne public and help individuals navigate the bankruptcy process.

How Bankruptcy Treats Credit Card Debt

Credit card debt is considered unsecured debt, meaning it is not tied to collateral such as a car or home. Because of this, credit card balances are commonly addressed during bankruptcy proceedings.

In a Chapter 7 bankruptcy, most unsecured debts, including credit card balances, may be discharged. This means the debtor is no longer legally required to repay those debts once the case is completed.

In a Chapter 13 bankruptcy, credit card debt may be included in a court-approved repayment plan. The individual typically makes monthly payments over three to five years, and any remaining eligible unsecured debt may be discharged after the plan is successfully completed.

What Happens to Your Credit Card Accounts

After filing bankruptcy, most existing credit card accounts will be closed by the creditors. This occurs because lenders consider bankruptcy a sign of increased lending risk.

Even if the credit card has a zero balance at the time of filing, the issuer may still close the account once they learn about the bankruptcy case. Creditors are generally notified when the bankruptcy petition is filed.

Closing accounts may affect your credit utilization ratio and the length of your credit history, both of which can influence your credit score.

Can You Keep Any Credit Cards?

In most situations, individuals filing bankruptcy are required to disclose all debts and credit accounts. Attempting to keep a credit card and continue using it during bankruptcy can create legal complications.

However, after a bankruptcy case is completed, some people may begin rebuilding credit by obtaining new credit cards designed for individuals with

damaged credit. These often include secured credit cards, which require a refundable deposit that acts as the credit limit.

Responsible use of these types of accounts may help individuals gradually rebuild their credit over time.

How Bankruptcy Affects Your Credit Score

Filing bankruptcy can initially lower your credit score because it signals a history of financial difficulty. A Chapter 7 bankruptcy may remain on a credit report for up to ten years, while a Chapter 13 bankruptcy typically remains for seven years.

However, for many individuals already struggling with significant debt, bankruptcy may also provide a fresh start. Eliminating large amounts of credit card debt can make it easier to maintain on-time payments and rebuild credit moving forward.

Steps to Rebuild Credit After Bankruptcy

After completing bankruptcy, many individuals focus on rebuilding their financial standing. Some helpful steps may include:

• Paying all bills on time
• Keeping credit card balances low
• Monitoring credit reports regularly
• Using secured credit responsibly

Rebuilding credit takes time, but consistent financial habits can gradually improve a credit profile.

How Legal Guidance Can Help

Bankruptcy laws involve complex procedures and financial disclosures. Working with a knowledgeable attorney can help ensure that your credit card debts are properly handled and that your rights are protected throughout the process.

At Wiggam Law Office, LLC, we can provide legal assistance to the Cheyenne public and help individuals understand their bankruptcy options and financial recovery strategies.