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Can I Keep My Credit Cards in Bankruptcy?

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Complimentary Evaluation

Arietta Law Complimentary Evaluation

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In general the answer is “no”. Once you file bankruptcy, credit card companies will know you filed whether you list them or not. Most credit card companies will close your existing accounts, even if you have a zero balance at the time of the bankruptcy filing. While your bankruptcy case is open it will be hard for you to acquire new debt but you should be able to get a secured credit card. A secured credit card is one that is tied to the balance in your checking or savings account.

We do not recommend that clients keep their credit card accounts current going into the bankruptcy because there is no assurance the credit card company will keep the account open or extend additional credit after the case is filed. So if you are contemplating bankruptcy, now is the time to consult with a Contra Costa County bankruptcy specialist like David A. Arietta. We would need to strategize what is your best option. Many clients are enrolled in debt management or debt consolidation programs.

If bankruptcy is a better option, the client needs to terminate those programs and possibly get their money back. You may need help navigating pending collection lawsuits or collection letters. Exempt assets like 401Ks and IRAs should not be used during such time to pay credit card accounts if a bankruptcy is contemplated. We also do not recommend communicating with debt collectors as they will get you to give them some money as payment on the account. They usually accomplish that with false unqualified statements like “we will garnish your wages” or “we are going to levy your bank account”. They do not tell you that they first have to sue you and get judgment before they can take those actions; merely writing you a demand letter or calling on the phone are not enough.

If you are filing for Chapter 13 bankruptcy relief, you may be able to use a credit card or gas card for business purposes.

Once your discharge is entered you will again be eligible for credit cards but you may need to let some time pass to obtain better terms. The credit card offers that you get post-discharge will require you to pay off the balances on monthly basis to avoid very high interest rates. We do recommend getting some credit post-discharge and keeping the payments current so you can start rebuilding your credit. Do not worry because before long you will be getting better credit offers again, most likely from the same companies you listed on your schedules.

For more questions about bankruptcy, visit our FAQ page.