A common reason that consumers file under Chapter 7 of the Bankruptcy Code is to eliminate credit card debt. The main purpose of Chapter 7 is to discharge unsecured and nonpriority debt.

Unsecured debt refers to that which is not backed by any collateral. Nonpriority debt refers to that which is not entitled to special treatment and is the last priority to pay if funds are available to creditors. This includes credit card debt, personal loans and medical bills.

According to the United States Bankruptcy Court, a successful Chapter 7 case results in a discharge, which releases the debtor from being liable for most debts. It also prevents the creditors from pursuing collection from the debtor. This discharge usually takes place between 60 and 90 days after the first meeting of creditors.

The bankruptcy process also aims to prevent the debtor from taking on more credit card debt in the future. Anyone who wishes to pursue bankruptcy must take a credit counseling course within 180 days before filing for bankruptcy. The U.S. Trustee must approve of the agency providing the counseling. Once the debtor finishes the course, he or she receives a certificate of completion, which he or she must file with other bankruptcy forms.

The debtor must also take a debtor education course after filing. This program provides the debtor with financial management tools, including guidance for rebuilding credit and creating a budget after bankruptcy. Once the debtor receives a certificate of completion for this course, he or she must file it within 60 days after the meeting of creditors.

Not only do bankruptcy filers generally find relief from credit card debt, but they also have an opportunity to completely rebuild their finances.