Can I Keep A Credit Card When I File For Bankruptcy?
The idea behind the bankruptcy law is to allow the honest debtor a fresh start financially by eliminating all of the debts owed by the debtor.
So, if you are filing bankruptcy, why would you want to hold on to one of your credit cards?
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.
While my “emergencies” may not have qualified, there is no question there are real emergencies in life, and it is always good to have a backup plan to get you through those dilemmas. However, wouldn’t it be satisfying, if, instead of relying on that credit card to bail you out, to be able to do it yourself? This is returns us to the financial fresh start intended by the bankruptcy law. Once you have liberated yourself from the burden of your debts, you can concentrate on building your savings. After filing bankruptcy, take that $100/month you were devoting to credit card payments and pay it to your savings account instead. Now you can apply yourself to rebuilding your credit without the worry of getting caught in the same trap.
Within a surprisingly short amount of time, you can create an impressive emergency fund. Get a flat tire? You’re covered. Tooth starts aching and need to run to the dentist? No need to pay for that trip to the dentist for a year after your tooth is fixed if you have an emergency fund available to cover the cost.
The court requires that all people filing bankruptcy list every creditor they owe money to on their bankruptcy petition. When signing their petition, I advise all clients filing Chapter 7 or Chapter 13 that they are declaring they have done so under penalties of perjury. I am not an 18 year old college freshman anymore, so as much as I would like to think that my advice is being followed, I know that is not always the case.
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 free yourself from that ball and chain and take control of your financial life by saying “goodbye” to the idea that you need a credit card to help you out of a jam and, instead, rely on the emergency fund that YOU created!
Want to find out more about bankruptcy? Then visit K. Hunter Goff’s site on how to choose the best bankruptcy lawyer for your needs.
September 8, 2010
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Posted by K. Hunter Goff
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