Do I Have to List All Credit Cards In Bankruptcy Or Can I Keep Some?

The answer to this question of whether you can keep certain credit cards while discharging other credit cards is: It depends. There are a couple of things that affect the answer to this question for your specific situation. Often we’ll have clients who come to us who have a credit card with a balance which they would like to keep. “I would like to keep this credit card because I have a good relationship with this bank.”

All Cards With A Balance Must Be Disclosed

If you have a balance on a credit card, then by law, the bankruptcy disclosures require that we list each card that has a balance. If you have a balance, we must list the credit card.

Get A Complete Fresh Start Instead Of A Partial Solution

Even if we weren’t required to list all your credit cards with balances, (which we are required to disclose by law,) as your attorneys who want to look out for your best interests, we would want you to list them anyway! There are a couple of reasons for this as you’ll see below.

Because our goal is always to get the best, and most favorable financial outcome for our clients, it is our goal to discharge the maximum amount of debt, while protecting the maximum amount of your assets. For example, if you have a balance of $1,100 on a credit card, and you have a limit of $2,000 and you see that card as a favorite card that you would like to keep, we would reason with you and urge you that it is in your best interests to discharge this debt, even though you like the card and would like continued access to the available credit. Here is a scenario that makes this even more clear. If we did choose to leave out listing a particular creditor such as a Card Company at which you carry an $1,100 credit card balance. We don’t have any guarantee that the credit card company would keep your line of credit open anyway. These lenders typically make regular inquiries into the financial standing of their card holders, so when they do these regular checks, it could become apparent to them that you have filed to receive bankruptcy protection. As a security measure, most card companies will close down all credit accounts of those folks who have a bankruptcy listed.

Don’t Shoot Yourself In The Foot Trying To Keep One Credit Card While Eliminating Other Credit Cards

For this reason, even if we were allowed to recommend you keep a credit account, we wouldn’t recommend a client to keep a credit account for which they have a balance anyway. The last thing we want is for you to omit listing a creditor in your bankruptcy. When we do not list the creditor, it will not be discharged as a matter of policy. Then, when the account gets closed anyway, you’re left with the debt, and don’t even have access and ability to continue to use the credit account. Hence, you can see that by trying to keep a credit card that has a balance, you end up shooting yourself in the foot.

Preferential Transfer

In other situations, we’ll have clients who want to keep a certain credit card and in order to not be required to list the card in their bankruptcy; they will choose to pay that particular card down to a zero balance. If a credit account has a zero balance, it is not required to be listed in a bankruptcy. Depending on the amount of money that is needed to pay that card to zero, it could end up in a troublesome situation. By paying down an amount of, say $2,000 on a credit card, we’ll be required to list this as it is an amount over $600, within a short interval prior to filing bankruptcy. The trustee could view this as a preferential transfer and choose to reach back to that credit account and pull back some of that money and use it to pay back portions of other unsecured creditors.