Will my credit cards be paid with interest in a bankruptcy case?

As a general rule, unsecured debt (credit cards, medical bills, finance companies, payday loans, etc.) will not be paid any interest in a bankruptcy case.  In a Chapter 7 case, your unsecured creditors will not receive any money.  As long as you complete your bankruptcy case and obtain a discharge, in most cases these unsecured creditors will not be paid at all.

In a Chapter 13 case, your confirmed plan will control how the unsecured creditors will be paid.  In the majority of Chapter 13 cases, no interest is paid to the unsecured creditors.  The interest that you may see listed on your Chapter 13 plan is the amount to be paid to your secured creditors (car loans, furniture, etc.).  Your Chapter 13 plan will usually propose to pay your unsecured creditors in full with no interest or a small percentage of your debt.

In Chapter 13 cases, if your income is exceptionally high, the Chapter 13 Trustee may require interest to be paid on your unsecured debt.  Such cases are not the norm.  Even if you are required to pay interest on your unsecured debt, it will be at a rate much lower than your credit card or loan interest.

Angie Seymour
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Bankruptcy Attorney Serving Augusta, GA