An individual who files for Chapter 7 bankruptcy in Riverside will likely have to surrender all of his credit cards. As soon as the credit card company finds out about the debtor’s bankruptcy, the credit card will probably be canceled. However, the debtor can begin building his credit after his bankruptcy case is closed. It will eventually be possible for the debtor to obtain one or several new credit cards.
Why a credit card is canceled after filing for bankruptcy
Some Riverside debtors who are considering bankruptcy try to exclude specific debts from the bankruptcy petition. For example, debtors want to keep a credit card for emergency expenses. Unfortunately, all credit card debt must be listed on your bankruptcy petition.
Bankruptcy law also states that debtors must list zero balance credit cards as well. Keep in mind that revolving credit card accounts are contracts that creditors can cancel when you file bankruptcy. This includes auto loans and leases. The credit issuer will cancel the debtor’s credit cards as soon as you file bankruptcy.
Are there any exceptions to keep your credit card
You can normally keep creditor cards issued to you by your employer. This will depend on whether or not you are an obligor on the debt. An authorized user will have his business-related charges billed to the employer. The account is not in the name of the user so it it is not your debt. This is the type of credit card that one can continue to use during and after a bankruptcy.
Alternatively, an obligor is responsible for paying the balance of the card. In such instances, the individual usually pays the credit card bill and subsequently obtains reimbursement from his Riverside employer.
More facts that you need to know
If this type of account has a balance, you must list it on the bankruptcy paperwork. The creditor will likely close the account after filing for bankruptcy. It is also worth noting a debtor who holds a credit card with a zero balance might be able to keep the card. The creditor can close the account as a result of the bankruptcy.
Furthermore, if the account remains open following the bankruptcy, there is a good chance that the creditor will increase the interest rate. However, there is a chance the creditor will overlook this zero-balance account and allow it to remain open.
Do not Lose all Hope!
It is possible to rebuild your credit following a bankruptcy. Once the bankruptcy closes, you might receive new credit card offers in the mail. You can apply for a secured line of credit in which you add money to a card, spend the balance and gradually build a level of trust with the card issuer. Proceed with caution, establish yourself as a trustworthy borrower and you will eventually return your credit score to a decent level.
NOTE: This is for informational purposes only and does not constitute legal advice.