Many bankruptcy filers are wondering whether they are entitled to keep one or several credit cards for emergencies backup. In general, you may not because your credit cards will be cancelled regardless, since you file the bankruptcy. The credit card issuers tend to punish their card holders for filling any kind of bankruptcy; in most cases, the credit cards of bankruptcy filers will be terminated once they file for a bankruptcy. But there are some exemptions where terms and conditions will be applied to enable the bankruptcy filers to continue holding their credit cards.
There are some exceptions applicable only to chapter 7 bankruptcy filers. Some credit card's issuers will allow you to keep your credit card but with a sized down credit limit, and in return you need to repay them for some of your debts. In fact, some companies will automatically send you or your attorney a proposed reaffirmation agreement, a contract between you and your creditor that you will pay all or a portion of the money owed, despite the bankruptcy filing, in exchange for a minimal amount of new credit.
Beside the sized down credit limit, a chapter 7 bankruptcy filers may allow to keep their credit cards by some of their card issuers but the interest rate will be revised to a higher than the normal interest rate. But, if you can always pay your credit balance in full each month, you will never incur a finance charge, and the high interest rate won't hurt you.
Other than chapter 7 bankruptcy filers, all credit cards must be given up at the filling of bankruptcy. However, there are credit card holders who have maintained their credit cards at zero balance for a long period of time do not report their credit cards during the filing. This action can be considered illegal since in effect your preference on one creditor (your credit card issuer) over other creditors, because repayment ordination is a trustee job.
If you are not eligible to file under chapter 7 or even you are filling under chapter 7 but you didn't manage to get approval from your credit card issuers to keep your credit cards, the best thing is report all your credit cards and give them up. In most cases, your need to wait until the bankruptcy filing has cleared and then work with a debt management consultant to rebuilt your credit step by step. Of course, in the months and years after the bankruptcy filling, you may not be eligible for top-tier or even middle-tier credit cards.
But with some efforts and fiscal strategy such pay your monthly credit balance in full and on schedule will help you to rebuilt your good credit record and you can begin to erase the stigma of the bankruptcy; and eventually put you back in the realm of good to high credit score.
In Summary
In most cases, bankruptcy filers need to give up their credit cards. But, there are exceptions for bankruptcy filers in chapter 7, the debtors who file their bankruptcy under chapter 7 may allow to keep their credit cards with some terms and conditions.
Cornie Herring is the Author from http://www.studykiosk.com/CreditBasics. "StudyKiosk-Credit Basics" is an informational website on credit basics, debt consolidation and bankruptcy. To see recommended bankruptcy attorneys, visit: Recommended Bankruptcy Attorneys
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Frequently Asked Questions
How long until a house goes into foreclosure?
By: shelly1066 | 23-08-2008
We are filing for bankruptcy in november and our attorney told us to stop paying our mortgage as of august 1st and let it go into foreclosure. I'm very nervous about this and wondering how long until the house goes into foreclosure and how long will we have to stay.
Help to get them to stop charging finance charges.
By: nancy moore | 23-08-2008
Hi Lita,
I need help with a credit card that has a high balance. I am working with the collection agency and pay 500.00 a month, however that barely covers the finance charges that they keep charging. What can I do or say to them to get them to stop the finance charges so that my money goes to pay the principle. At this point I would never get this paid off. Thank you.
If I have a credit card and bank account at the ...
By: esd | 23-08-2008
If I have a credit card and bank account at the same banking insititution, Can they take funds directly from my bank account if I my credit card account goes unpaid?
Credit Card payoff
By: patricia | 23-08-2008
How do I determine which credit card to pay off first, by the balance or the interest rate?
Bankruptcy? Should I?
By: cindyclaaa | 23-08-2008
I am in debt about 25,000.00. I am thinking of filling for bankruptcy however I need to get more information on how that works. I am a single mom of two. I make about 35,000. annually. I rent an apartment for 1300. monthly. Need help
I have about 15,000 dollars in credit card debt ...
By: huney411 | 23-08-2008
I have about 15,000 dollars in credit card debt. I have found that i am at this point only able to make the minimum payments and find myself transferring the balances between cards when they offer 0%Apr deals. I recently looked into debt consolidation and the payments would actually be more than i am paying now, which i am barely able to afford. I am wondering is it possible to get a loan from my credit union and pay off my credit cards, and then just pay on that loan over the next 5 years? do you think that would be beneficial at all? I really am not sure WHAT to do... but i know that i want to pay off this debt, close some of my accounts so i am not so tempted to use them... and live within my means finally! thanks.
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