As a bankruptcy attorney, we many questions about credit card debt. There are several myths about credit cards in bankruptcy. This includes the idea that you may have to turn in or surrender all your credit cards to the trustee. The reality is, most trustees will not require you to surrender your cards. This is especially true if you file for a Chapter 13 and plan on making monthly payments.
As your Riverside County bankruptcy attorney, it is important for us to understand what your motivation is to keep certain credit cards active. Believe it or not, there are ways that you may be able to hang on to some of your credit cards. In some cases, you can even use them after the bankruptcy is successfully discharged. As a word of caution, it is not common for credit cards to stay active after bankruptcy is discharged.
Credit Card Debt in Chapter 13 Bankruptcy
All of your creditors are included in your Chapter 13 bankruptcy when we, as your bankruptcy attorney, file your case. The bankruptcy court will send notice of your filing to all creditors listed on the bankruptcy papers. Most credit card companies will cancel your cards with they receive this notice. However, there are certain circumstances after bankruptcy where you might be able to keep your credit cards.
It is wrong to believe that credit card companies will not find out about your bankruptcy for two reasons. First, you are required to list all debts that are outstanding. This automatically generates a letter informing your credit card company about your bankruptcy. Second, all credit card companies get information from credit reporting agencies on a regular basis. The bankruptcy court will inform the credit reporting agencies about your bankruptcy filing. Therefore, your credit card company will find out one way or the other.
Keeping Your Credit Card in Chapter 13
In most cases, you will not be able to keep any credit cards when you file bankruptcy. However, if there is no debt on the card, the lender would not be harmed and might keep your card open. As your bankruptcy attorney, we list your credit cards as being paid as part of your bankruptcy payment plan if there is a balance on it. In this case, they will receive some money towards what you owe but not all of it. Keep in mind that you cannot incur debt without the court’s permission during a Chapter 13.
NOTE: This is for informational purposes only and does not constitute legal advice.