Tuesday, September 13, 2016

Am I Allowed To Keep My Credit Cards If I File Bankruptcy?

The vast majority of bankruptcy cases are filed due to overwhelming credit card debt. In today’s economy many consumers are forced to resort to use of credit cards just to pay for every day needs, but if you rely on credit too often you will soon run out and find yourself owing more than you can pay. A Chapter 7 bankruptcy will eliminate your high interest rate credit card debt in its entirety, and a Chapter 13 case will allow you to wipe out a portion of this type of debt. But the thought of not having a credit card is scary for those who use them regularly, and a lot of people want to have a credit card at their disposal even if they file bankruptcy and even if the card is only used for an emergency. However, when you file bankruptcy you have to list out all of your debts and most card issuers will not permit you to retain their card if you are discharging the debt that goes along with the card.

Filing bankruptcy is supposed to give you a fresh financial start, which means freeing yourself of the debts you cannot pay. What this allows you to do is to get rid of not only the debt, but also the monthly payment that services the debt. The thought is that if you are no longer required to make a payment, you will have more disposable income to put towards necessities and eliminate the need to use credit. So while a lender is unlikely to let you keep using their credit card after you file bankruptcy, you should come out ahead if you do the following:

         Put aside the monthly payment you were making to the credit card issuer, or at least a part of that payment, so you can build a savings or emergency fund.

         Obtain new credit after your case is over, but refuse to use the card for anything other than an emergency.

If you are considering filing bankruptcy and wonder what this means as far as having credit cards is concerned, call us. Keep in mind you do have to list every creditor you have, and cannot give any one lender preferential treatment over another. What this means is that you cannot pay off a card in the hopes of keeping in the good graces of the creditor, or to keep charging privileges. Life without a credit card can be scary, and we understand those concerns, but life with fewer monthly  bills to pay helps to put these fears to rest.

For more information about what to do with your credit cards if you file bankruptcy, call us today or reach us online at www.law-ri.com. We offer appointments at multiple locations for your convenience and can schedule a time to visit with you today.

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