Credit cards During Bankruptcy and After Bankruptcy
The goal of filing for bankruptcy is to eliminate your debt to creditors to give you a new start with your finances. For many people, one of the largest culprits of bankruptcy is credit card debt. An Arizona bankruptcy attorney can advise you on how to best file for bankruptcy given your circumstances and your credit card situation.
Can I keep my credit cards after filing for bankruptcy?
When considering bankruptcy, one of your questions might be about whether or not you can keep your credit cards. In Chapter 7 bankruptcy, you are surrendering all of your assets and naming all debt that you owe, including your credit card debt to have it dismissed. Any debt that you don’t list in your filing won’t be dismissed at the end of your filing.
In this situation, it’s in your best interest to list all of your credit cards that have an outstanding balance that you owe to the creditor. As part of the process, the court will notify the credit card company of your bankruptcy filing, in which case they will shut down your credit card so that you cannot continue to accrue more debt with them.
In Chapter 13 bankruptcy, you file to set up a payment plan of three to five years to pay off as much of your debt as is reasonable given your income and daily living expenses. At the end of the payment plan, any remaining debt is dismissed. But the same is true about the credit card companies shutting down your card when you name them in your bankruptcy filing.
Click here for an article on credit card debt in Chapter 7 bankruptcy.
What if I have no outstanding balance on my credit card?
Credit cards without an outstanding balance do not need to be included in your bankruptcy filing. Additionally, these credit card companies will not receive a notice from the courts of your bankruptcy filing.
While you can keep credit cards that do not have a balance, most credit card companies do a regular credit check for their cardholders. Your bankruptcy filing will go on your credit record for any lender or credit company to see.
The timeframe for when this will happen varies based on the policies your specific credit card company uses for credit checks. However, at this time, it’s likely that the credit card company will shut down your remaining cards because you’re now a much riskier customer.
Should I use my credit card if it’s kept open?
Individuals who file for bankruptcy often do so because they’ve struggled with paying off credit cards on time. Of course, there are also those who find themselves in hard times and credit cards are the only way they can pay for groceries.
If you’re an individual who struggles to make credit card payments on time and in full, it might be best for you to stop using credit cards, even if the company allows you to keep your credit card.
Filing for bankruptcy gives you a new start and you don’t want to use that new start to begin acquiring debt all over again with using credit cards as a line of credit. Many people think that they must start using a credit card again to start building their credit score back up. While that can be helpful, there are other ways of building your credit. You can also build credit using a credit card only for gas and groceries to ensure you can always pay it off.
What role does an Arizona bankruptcy attorney play in my filing?
An Arizona bankruptcy attorney can evaluate your situation and your lines of credit to advise you on what type of bankruptcy to file. Because attorneys are experienced in completing these filings, they can also ensure that you don’t forget to name one of your debts so that it isn’t excluded from your filing. This will ensure you get that new start you’re looking for with your bankruptcy filing.