Can I Keep My Credit Card After Filing Bankruptcy?

In most cases, banks cancel a debtor’s credit cards when they receive notice of his or her bankruptcy.

But as always, the general rule has exceptions.

Whether or not you can keep your credit card after filing bankruptcy will largely depend on your bank and under what bankruptcy chapter you are filing.

Type of Bankruptcy

For starters, your ability to keep a card will also depend on whether you’re filing for Chapter 7 or Chapter 13 bankruptcy.

Under Chapter 13, you may lose all your credit cards and will not be able to borrow money without court approval while a Chapter 13 payment plan is still operating. Under Chapter 7, your ability to keep a card is mostly at the lender’s mercy.

Lender as Creditor

When you file for bankruptcy, you are required to list all of your creditors. If a lender is one of the creditors, certain trustees may request that you surrender your credit card. But if you really want to keep the card, you can oppose the trustee’s request.

You can also keep your card after your bankruptcy case is filed by reaffirming the credit card debt, which creates a binding contract with the lender making you liable for the debt all over again. Since the goal of filing for Chapter 7 is to remove liability for debt rather than pay it off, this choice isn’t advisable.

Lender Discretion

The vast majority of credit card agreements give card issuers the right to cancel customers’ accounts when they file for bankruptcy. This rule of thumb applies even if the lender isn’t a named creditor in your bankruptcy (you have no credit card debt with them).

Some lenders have a policy to automatically close the account upon notice of a bankruptcy filing, while others keep it open. It’s entirely up to the lender whether or not to keep the account open, so you’ll want to check your lender’s policy.

The main takeaway here is that lenders may keep credit card accounts open or close them, at their own discretion.

Even if you’re not able to keep your card, it’s not the end of your swiping world. Oddly enough, many people receive applications for new credit cards after filing for bankruptcy. Sure, you may have to use a secured card until your credit score improves, but it certainly beats lugging around loose change.

Related Resources:

• Find an Atlanta Bankruptcy Lawyer (FindLaw’s Directory)
• Free Legal Aid in Atlanta (FindLaw’s State Laws)
• Credit Union Lending, Different than Banks (FindLaw’s Atlanta Bankruptcy Law News)
• Atlanta Credit Card Debt Excessive, Extraordinary (FindLaw’s Atlanta Bankruptcy Law News)