Credit Cards and Bankruptcy

Before filing for bankruptcy, many debtors have triaged their debts, paying some while allowing others to become delinquent.  Most of these debtors want to know if they can keep that special credit card and keep it out of the bankruptcy.  The answer is no.  When a debtor files bankruptcy, they must include all of their outstanding debts and credit card accounts in the bankruptcy. That means that even if you have a small balance on that credit card you must include it in the bankruptcy because it is a revolving credit line with an outstanding balance, regardless of how small it is. It doesn’t matter that you paid every month and paid on time. Failing to include the credit card in the bankruptcy could cause your bankruptcy case to be dismissed.

But what if my credit card doesn’t have a balance?

A credit card with no balance technically does not need to be listed in your bankruptcy. However, most credit card lenders cancel a debtor’s account once they have filed for bankruptcy, even if that card was not included in the bankruptcy filing.  While it may be possible to reapply for a credit card with the same lender after your bankruptcy discharge, you may be starting from square one with a higher interest rate and maybe even a secured credit card account.

It is important for debtors who file bankruptcy to understand that while you can technically reaffirm any debt during bankruptcy; it is probably not a wise decision to do so with a credit card.  Even if your credit card account was in good standing before bankruptcy, the lender will most likely increase your interest rate after the bankruptcy filing and automatically cancel the account. And why reaffirm credit card debt when you can get a fresh start (free of credit card debt) after bankruptcy and apply for a secured credit card?