The thought of cutting up your credit cards may make you panic, even if you're struggling financially. However, you may be able to keep your credit cards if you file for Chapter 7 bankruptcy. A bankruptcy attorney will listen to your concerns and offer guidance on how to proceed. Here are some possible scenarios that may happen after you meet with a Chapter 7 bankruptcy attorney.
1) Your credit card company will let you keep the account open and use it after filing for bankruptcy
This scenario is possible if your creditors are willing to accept a repayment plan through the bankruptcy court. Depending on the terms of your credit agreement, your creditor may still require you to pay them back for any debts that remain after discharge. This type of agreement is known as a reaffirmation agreement and requires you to continue making payments on the account.
2) Your credit card company will close the account but allow you to keep your current balance after filing for bankruptcy
In this case, your creditor may decide to write off the balance of your account and close it even if it is not included in your bankruptcy petition. Before you get excited, keep in mind that this does not mean that you are no longer responsible for the outstanding balance. You will still be required to pay back the debt even after your bankruptcy case is discharged.
3) Your credit card account will be included in your bankruptcy petition
Your creditor may decide to include your account in your bankruptcy petition. This means that if you do not reaffirm it, the debt could be discharged in your bankruptcy case (but not necessarily) and you will no longer have to worry about paying it. Keep in mind that even if the debt is discharged, it may still remain on your credit report for several years.
4) You can continue using your credit card during bankruptcy proceedings if you don't keep a balance on it
When you file a bankruptcy petition, you are required to list any debts. However, a credit card that has been paid off is technically not a debt, as you have a $0 balance. You may still have to list your line of credit as an asset, though. Talk to a Chapter 7 bankruptcy attorney for guidance, as paying off a credit card in full each month to avoid a balance is a bit of a gray area.
No matter what scenario applies to you, it's important to speak with a knowledgeable bankruptcy attorney before making any decisions regarding your credit cards. A bankruptcy attorney will be able to provide you with advice and guidance tailored to your individual circumstances.
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