Another question I get quite frequently from clients considering bankruptcy is whether they can keep a specific credit card or other loan out of their bankruptcy. In today’s world credit cards are a huge part of our daily lives and some have come to depend on them. The thought of not having a credit card can be very scary one.
Whether you can keep a credit card after filing bankruptcy largely depends on whether you are filing a Chapter 13 or Chapter 7 Bankruptcy. If you are filing a Chapter 13 Bankruptcy, you cannot keep a credit card. This is because while you are in a Chapter 13 Plan, you are not allowed to acquire new debt without first obtaining permission from the court.
If you are filing a Chapter 7 Bankruptcy, theoretically, you can keep any credit card you want to as long as the issuing bank allows it. BUT, in most situations, the bank will require you to sign a reaffirmation agreement for your current balance in exchange for allowing you to keep the card open. This means that you must agree to pay back the full amount you owe even though you are filing bankruptcy.
Whether or not you should keep a credit card when filing a Chapter 7 Bankruptcy depends on why you want to keep it and whether is makes financial sense for you to do so. If you are considering bankruptcy, it is most likely that your debt has become more than you can handle. The reason for filing for bankruptcy is to get yourself out of a bad financial situation and into a much better one. You do not want to file bankruptcy, obtain a discharge and remain in a dire financial position because you decided to keep a credit card.
What if I have a credit card with a zero balance? Can I keep it then? Technically, if a credit card has a zero balance it is not a debt and does not have to be listed on your bankruptcy schedules. BUT, it is still very likely that even credit cards with zero balances will learn of the bankruptcy. Bankruptcy filings are public records and are reported to all major credit bureaus. This means that the next time the issuing bank runs your credit; it will learn of the bankruptcy and most likely cancel your card.
If you are considering bankruptcy and keeping a credit card, it is very important that you speak with an experienced bankruptcy attorney prior to doing so. Experienced bankruptcy attorneys can help you determine whether bankruptcy is right for you and whether keeping a credit card is in your best interest. Call and speak to an attorney today at (904) 685-1200.