Can I Keep A Credit Card When I File For Bankruptcy?

September 11th, 2010 | Posted in Credit Card Debt

A financial fresh start by wiping out debts for an honest debtor filing bankruptcy is the goal of the bankruptcy law.

The question then is, why would anyone want to keep one of the credit cards whose debt is burdening them?

To me, it appears the answer is simple: Emergencies. Many people are afraid that if they don’t have access to a credit card, they won’t have funds for an emergency. This brings to mind my freshman year of college. As an 18 year old, I was taken in by that free t-shirt! I did ask my parents if I should get a credit card. Their answer, “It’s a good idea to have one for emergencies”. The only thing wrong with this statement, I found that I found myself in a lot more situations I felt qualified as “emergencies”, where I would use that dependable credit card.

No doubt, there are legitimate emergencies in life. And, it is nice to have a credit card there to help bail you out of an unexpected mess. But, wouldn’t it be even nicer if you could bail yourself out of that emergency situation? Why not take that fresh start you’re being offered through the bankruptcy process and use it to rid yourself of the mindset that credit cards are the answer to life’s emergencies? After all, once your debts are discharged through the bankruptcy, you are free to pay yourself a “minimum” payment of, say, $100/month and to send that payment to your savings account instead of sending it to the credit card companies. This will also allow you to focus on rebuilding your credit without falling into the same trap.

You will be surprised at how quickly you can build an effective emergency fund. Car break down? Your savings covers you. Son fall out of the tree in the back yard and you need to go to the emergency room? With your own emergency fund, you will not be still be paying for that visit to the doctor next year.

When someone files for bankruptcy, the court requires they list everyone they owe money to in their bankruptcy petition. I advise all my clients when signing the bankruptcy petition, that they are declaring under penalties of perjury that they have done so. While I would like to believe this advice is followed by every client, I am not that 18 year old college freshman anymore.

I am well aware of clients who have attempted to keep one of their credit cards off of their bankruptcy with the goal of continuing to use it. Unfortunately, your creditors can still find out about your bankruptcy filing if you do not list them on your petition. Credit card company subscribe to a notification service that will deactivate accounts of customers who file bankruptcy. Once this happens, they are left with no credit card, and they have failed to disclose the debt in their bankruptcy, as required by law.

Why not take control of your financial life by rethinking the notion that you need a credit card to help you out in an emergency and depend instead on your own emergency fund that will don’t have to get into debt to have access to.

Learn more about bankruptcy. Stop by K. Hunter Goff’s site where you can find out all about this bankruptcy lawyer and what he can do for you.