Can I Keep My Credit Cards During Bankruptcy?

Especially in today’s modern world, you may be so accustomed to paying for everyday purchases with your credit card. However, you may need to fall out of this habit if you take the plunge and file for bankruptcy. With that being said, please read on to discover whether you have the chance to keep your credit cards during your bankruptcy case and how a seasoned Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can help you make the necessary adjustments.

Am I allowed to keep my credit cards during bankruptcy?

The short answer is no, you generally do not get to keep your credit cards once you file for Chapter 7 bankruptcy. This is because your credit card is essentially a legal agreement between you (i.e., the cardholder) and the credit card company. This contract establishes both parties’ rights and responsibilities. For example, you agree to repay your debt within the set terms, while the company promises to provide credit and manage your account. It also discloses the consequences of not upholding these obligations. Namely, if you fail to pay off your credit card, the company may be allowed to impose late fees, inflate your interest rates, drop your credit score, and worst of all, sell your debt to a collection agency.

All of this to say, not holding onto your credit cards during bankruptcy may be a good thing. This is because your legal agreement may no longer exist. Further, an agency may no longer hold the right to pursue harassing collection activities against you. What’s more, your credit card debt is typically dischargeable at the close of your Chapter 7 bankruptcy case. This means that so long as you follow the legal procedures correctly up to this point, this debt may be eliminated from your immediate financial responsibility.

What happens if I don’t list my credit cards on my bankruptcy petition?

You may now understand that it is for the best that your credit cards get canceled during your bankruptcy case. Therefore, there is no sense in neglecting to list them in your initial bankruptcy petition, in an attempt to keep them. In fact, if you are caught doing so, you may get into serious trouble with your appointed bankruptcy trustee and the Kentucky bankruptcy court. Specifically, you may be required to repay your previously discharged debts or be denied a bankruptcy discharge outright. Rest assured, you may still have a means of paying for your necessary expenses, such as through cash on hand and debit cards linked to your open bank accounts.

What happens if I’m an authorized user on someone else’s credit card?

You should not let the fact that you are an authorized user on someone else’s credit card deter you from filing for Chapter 7 bankruptcy if you absolutely need to do so. This is because your petition will have little to no effect on their credit standing. At the very least, though, you should give the primary cardholder the courtesy of notifying them about your impending plans. They may find it best to remove you as an authorized user on their account beforehand.

This matter may obviously be important to you, and you may want the best possible outcome. So please, do not fight this without a competent Louisville, Kentucky consumer bankruptcy lawyer in your corner. The team at Schwartz Bankruptcy Law Center is here at your command.