According to the Statista Research Department, 522,808 non-business bankruptcy cases were filed in 2020 alone. Even though filing for bankruptcy is fairly common, many people have no idea what the process entails.
Can you keep any credit cards after filing for bankruptcy? What will happen to your credit score?
Our attorneys receive dozens of questions like these every day. Unfortunately, the answer typically involves more than a simple yes or a no. We have compiled answers to a few of our most frequently asked questions about bankruptcy and credit cards below.
1. Can I Keep a Credit Card in Chapter 7 Bankruptcy?
Unfortunately, you typically cannot keep your credit card accounts when you file for Chapter 7 bankruptcy. Bankruptcy treats all of your creditors the same, and this includes your credit card company.
Filing for Chapter 7 bankruptcy cancels all of your financial contracts, including credit card agreements, leases, and secured car loans. But this doesn’t mean you cannot keep your vehicle(s) and/or lease(s).
Once your credit card company finds out that you filed for Chapter 7 bankruptcy, they will likely cancel your credit card because they can no longer enforce your obligation to pay your credit card balance.
2. Can I Exclude a Credit Card from Chapter 7 Bankruptcy?
When you file for Chapter 7 bankruptcy, you will list all of your debts. That includes all of your credit cards. Therefore, you cannot exclude a credit card from Chapter 7 bankruptcy to avoid losing it.
3. Can I Keep a Company Credit Card if I File for Bankruptcy?
Many individuals use separate credit card accounts for their businesses. So you may wonder if you will lose that credit card in bankruptcy along with all your others.
Whether or not you can keep this card depends on how the account is set up. If the company credit card is set up in the company’s name and you are just an authorized user, you can likely keep the company credit card. You are likely to be able to keep the card because, in this case, the debt obligations owed are billed to the company directly.
However, if you are an obligor on the company credit card account, this means that you and your company are jointly responsible for paying the debt. As an obligor, you typically have to pay the bill and then seek reimbursement.
If this is the case, you will likely need to include the company credit card account on your list of debts when you file for Chapter 7 bankruptcy. This generally means that the issuer of the card will close the account.
4. Can I Keep a Future Credit Card If I File for Bankruptcy?
Luckily, filing for Chapter 7 does not prohibit you from ever having another credit card. In fact, you might receive numerous credit card offers in the mail after your Chapter 7 bankruptcy is processed. Typically, credit card companies advertise to recent bankruptcy filers because:
- Former bankruptcy filers are typically more cautious about using credit;
- You cannot file for Chapter 7 bankruptcy again for at least eight years; and
- Bankruptcy wipes out all of your debt, giving you more money to spend on new credit card bills.
But please understand that securing a credit card right after you finish filing for Chapter 7 bankruptcy is not always a good idea. If you struggled with high amounts of credit card debt, you might consider consulting with a debt relief attorney before you open another credit card account.
Once those bills start adding up, you might find yourself in the same situation a year or so into the future—but you won’t have the ability to file for bankruptcy for another seven years.
Still Have Questions About Bankruptcy and Credit Cards? Contact Our Bankruptcy Attorneys at Brenner Spiller & Archer
We understand that many of our clients are dealing with a very difficult time in their lives. Filing for bankruptcy is never an easy decision, but we can help you achieve a fresh financial start through the bankruptcy process.
Our legal team at Brenner Spiller & Archer, has over 35 years of experience assisting our clients with bankruptcy matters. Our experience in the bankruptcy industry has given us an extensive knowledge base from which to pull when assessing your specific circumstances and needs. We have earned the reputation of providing solid legal expertise and unwavering service to our clients. We have the experience necessary to represent you effectively in your bankruptcy case and secure a desirable resolution. Contact our office today to schedule your free consultation. We look forward to assisting you.