In bankruptcy, whether you can keep certain credit cards depends on several factors, including the type of bankruptcy you file, the creditor’s policies, and your specific circumstances. Here’s a breakdown:
Secured vs. Unsecured Credit Cards: If you have secured credit cards, where you’ve provided collateral (such as a deposit) to obtain credit, the treatment may differ from unsecured credit cards. In many cases, secured credit cards are not typically included in the bankruptcy estate because they are secured by collateral, which may be retained or surrendered depending on the bankruptcy chapter and your intentions.
Chapter 7 Bankruptcy: In Chapter 7 bankruptcy, the trustee may liquidate non-exempt assets to repay creditors. Non-essential assets, including credit cards, may be canceled or surrendered as part of the bankruptcy process. If you have outstanding balances on credit cards, those debts may be discharged, but the credit cards themselves may be canceled by the creditor.
Chapter 13 Bankruptcy: Chapter 13 bankruptcy involves a repayment plan rather than liquidation of assets. You may be able to retain certain credit cards and continue using them during and after the bankruptcy process if the creditor agrees and the terms of the repayment plan allow for it. However, you’ll need to disclose all your debts, including credit card balances, in your bankruptcy filing.
Credit Card Company Policies: The decision to allow you to keep a credit card after bankruptcy ultimately rests with the credit card company. Some creditors may choose to cancel your credit card upon learning of your bankruptcy filing, while others may allow you to keep the card if you’ve maintained a good payment history or if you reaffirm the debt.
Reaffirmation Agreement: In Chapter 7 bankruptcy, you may have the option to reaffirm certain debts, including credit card balances, by signing a reaffirmation agreement. By reaffirming a debt, you agree to continue making payments on it and retain the associated collateral (if applicable). However, reaffirmation should be approached cautiously, as it involves committing to repay a debt that could otherwise be discharged in bankruptcy.
Before making decisions about retaining or reaffirming credit cards in bankruptcy, it’s essential to consult with a qualified bankruptcy attorney. They can provide guidance based on your specific circumstances and help you understand the potential consequences of your choices regarding credit cards and other debts in bankruptcy.
