Submitted by Rachel R on Mon, 07/30/2018 - 9:42am
Can you keep credit cards after you file bankruptcy?
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Greensboro bankruptcy is life-changing, can get you out of debt and stop debt collector harassment the same day that you file the case. To get that relief, you must face consequences that balance the equation, but they’re usually worth it. One question we’re frequently asked by bankruptcy clients at their initial consultation is whether they can hold back a credit card and keep it for use during and after bankruptcy. The answer is “no,” with one notable exception.
Some consumers go into bankruptcy with credit cards maxed out or over the limit. Others try and keep one card in good standing so that they can use it when renting a car or other cases where plastic makes life easier. If you travel, a credit card protects you from hotels blocking a chunk of cash from your debit card which is money you need for bills. However, you can make do without a credit card, unload your debt, then get another one within a year (in most cases).
If you hope to keep a credit card during bankruptcy, think again. It’s not that the bankruptcy court will demand you hand your plastic to the judge or cut them up in court. The issue is the terms and conditions from your card issuer. Your bankruptcy filing goes onto your credit report so even if you don’t list a specific credit card in your petition, the card issuer will still find out, and they will close your account. They must do so because the bankruptcy case strips their rights.
Chapter 7 Greensboro bankruptcy usually takes three to six months from start to finish. Your credit cards will be shut down by the issuers, and once you have your discharge, after a four to six-month wait (in most cases), you can start rebuilding your credit. Most post-bankruptcy filers must start re-establishing their FICO score with a secured card and then move on to unsecured cards later. With Chapter 13, though, because it takes three to five years, you might get an exception.
You can petition the bankruptcy court and Trustee assigned to your case to ask that you be allowed to maintain a credit card account during bankruptcy if you can justify it. It is usually only permitted when having a credit card is necessary to do your job – such as for someone who travels often, must pay company expenses then get reimbursed, etc. Your lawyer must make the case, and it’s up to the court and Trustee to decide whether you can keep the card.
Once you get a bankruptcy discharge, it’s up to you where you go from there. The clean financial slate from bankruptcy is great, but then it’s time to get to work rebuilding your finances and credit score. Credit cards are one of the fastest ways to boost your score post-bankruptcy. After discharge, a secured card is usually the easiest to obtain. You put down a deposit, and your “credit” line is equal to your deposit so that the card issuer has no risk with the account.
After your score climbs and time elapses from your Greensboro bankruptcy filing, you can start applying for unsecured cards. Just be sure to check the policies of the card issuer to see if they will work with bankruptcy filers. Some don’t accept bankruptcy filers at all while others will but only after a specified time lapse post-discharge. Doing your homework will help you decide what cards are obtainable and which to avoid.
Don’t try and hide any credit accounts, cards or otherwise, from your Greensboro bankruptcy lawyer. You can face fraud accusations, and your case dismissed without the needed debt relief if you’re not honest and transparent with the Trustee, court, and your lawyer. Time will pass fast, and before you know it, you’ll be free of unmanageable debt and have plastic back in your wallet once again – this time hopefully not over the limit!
To find out more about the benefits of bankruptcy, read reviews from our clients then call +1-919-646-2654 to reach the Law Offices of John T. Orcutt. Schedule a free Greensboro bankruptcy consultation today at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.
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