The answer is NO, you can’t keep credit cards in bankruptcy. But there’s good news, too. Keep reading.
When you file your bankruptcy, you’re only required to notify your creditors with whom you carry a balance. However, even credit card companies you have a zero balance with will be notified of the bankruptcy filing. They receive that notice through credit reporting agencies. When they receive the notification they will typically freeze and close the account. They do this as a policy, and it has more to do with bankruptcy than it has to do with their relationship with you. So, don’t take it personally.
Your credit card debt is discharged in bankruptcy. This means without a reaffirmation agreement in place, the debt is no longer your responsibility. This is part of the powerful relief of Chapter 7 bankruptcy. Reaffirming or re-entering into credit card debt is typically not a wise choice, and most courts frown upon it. So, when a credit card company realizes someone has filed bankruptcy, the safest thing for them to do is close down the account. This doesn’t mean you won’t be able to do business together again in the future.
Credit Cards After Bankruptcy
It’s reasonable to wonder whether you will be able to obtain credit cards after bankruptcy. Some clients want a credit card for emergency purposes, or to rebuild their credit score. others simply want to know when things will return to “normal” in terms of relationships with credit card companies.
There are two types of credit cards: Unsecured and Secured. An Unsecured credit card is the type of credit card most of us are familiar with. The bank loans you money, and you repay that money with a monthly payment. If you fail to re-pay, the bank can sue you for the outstanding amount. A Secured credit card works a little differently. You start off by depositing money into an account at the bank (typically a credit union). Then, you’ll be allowed to charge against those funds. Each month, you’ll receive a monthly statement and a minimum payment. This arrangement is beneficial to the bank because your ‘debt’ is secured by your deposit. For someone with a low credit score of just coming out of bankruptcy, this is a great option because it allows you to build your credit score—your monthly payments to the bank will be reported to the credit agencies and your score will build accordingly.
Credit Card Offers After Bankruptcy
After you receive your discharge in bankruptcy, you may be surprised at how many offers for credit cards you receive. Clients are always surprised to hear this. The reasons make sense, though. First, by filing bankruptcy you have eliminated a lot of debt. Individuals without debt are good candidates for credit cards. Second, your debt to income ratio has improved. While your income has not changed, your debt has gone down. Again, you look like a good candidate for extending credit. Lastly, banks know you can’t file bankruptcy again for several years. This means that you’re more likely to re-pay any credit card debt you incur after bankruptcy.
Speak With A Bankruptcy Lawyer Today
If you have questions about bankruptcy, we’re here to help. Most of the answers are surprisingly better than you think. If you’d like to speak with a bankruptcy lawyer call us at 704.749.7747 today. Or, click HERE to request a call from us. We know you have choices. We hope you choose to Recover With Us.