While medical expenses and job loss are the top two reasons for filing for bankruptcy, excess credit card use is easily the top third reason people file for bankruptcy. It can be very easy to buy something you want when you know all you have to do is swipe a card. Unfortunately, the items you are buying on credit have to be paid off at some point. If the items are not paid off within the month, then you accrue interest charges on top of the payments you already owe. For many people, it can quickly become out of control. When it comes to filing bankruptcy, it is important to understand how credit cards and the items you have purchased with them are affected. Here are some things you should know. 

Security Agreements

When you make a purchase with a credit card, it is important to understand when you actually own the item. Many credit cards provide security agreements that dictate when you own the item. If there is a security agreement, it should imply that the item is used as collateral for the debt. Should the security agreement specify that the legal title of the item is not yours until the debt is paid off, then you technically do not own it until you have made the last payment on it. Not all credit cards have security agreements. Most major credit card companies do not contain this agreement. You are likely to see a security agreement when you have a store credit card. This means, if there is a security agreement, the item can be taken away from you if you choose not to pay for it. 

Owning Your Items

When you have an accumulation of credit card debt, it can be hard trying to figure out which items you have paid off and which ones you haven't. Typically, when you make a payment towards your credit card debt, the company will apply that amount minus any interest to the oldest item you purchased. This can help you decide which items were purchased longer ago and what has been fully paid off. 

Taking Away Items

Should you decide to file for bankruptcy, it is important to understand what items are subject to be repossessed. In many cases, companies will only be interested in white goods. These are high end items like appliances and furniture. Things like soft goods are not nearly as important. Soft goods are considered clothes, video games, CDs, and more. As long as the item is worth a substantial amount, a company will be more interested in taking it back. You can always try settling this debt by paying the company money to keep it. 

For more information about the nuances of bankruptcy, contact a lawyer like one from Hornthal Riley Ellis & Maland LLP.