We are often asked “Can I just keep this one credit card?” during initial bankruptcy consultations.
As we move further and further towards a cash-less economy, having a credit card has become more and more important. It is often a big problem for our bankruptcy clients to be left without a Visa or Mastercard after filing.
The answer to the legal question is … “Maybe.” And only if the balance on the card is zero when you file your case.
When you file for bankruptcy, the law requires that you provide a list of all of your creditors. A credit card, however, is not always a creditor.
HOW CAN A CREDIT CARD NOT BE A CREDITOR?
A credit card isn’t always a creditor because the bankruptcy code defines a “creditor” as someone who has a claim for money against the debtor. If there is a balance on the card, then it must be listed as a creditor and the debt will be discharged.
A card with a zero balance does not need to be listed in your bankruptcy, and the credit card company might decide to let you keep it open.
WILL THE CREDIT CARD COMPANY LET YOU KEEP THE CREDIT CARD?
The credit card company almost always has the right to cancel the account at their sole discretion.
How will they know if they are not listed as a creditor? Most large lending companies subscribe to an electronic information service that alerts them to all bankruptcy filings and allow them to cross-reference their accounts.
But the truth is that each company has its own policies and even if they are aware of the bankruptcy, they may not cancel the card.
The other option is a reaffirmation of the credit card debt post-filing. Again, this is up to the company and its policies but it is another option in order to gain access to credit.