Credit cards and Your Bankruptcy Case

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Bankruptcy Advice for Your Friends

As a Los Angeles Bankruptcy Attorney, I get more questions about credit cards than anything else. Let’s clear up some credit card mysteries and myths. If you care about having credit cards AFTER bankruptcy, you need to know  how to hold ‘um and when to fold ‘um. As a Los Angeles bankruptcy lawyer since 1979, I’ll advise you how.

Very often I hear people say

When I file Bankruptcy, I can omit any Credit Card that I want to keep, right?

Wrong. Wrong. Wrong.

Information flows at the speed of light, just like this Blog does from our server directly to your computer. Virtually all institutional credit issuers will know that you filed, so forget about trying to keep a secret from any of them. You do not get to keep any credit card just because you want to. Ultimately it is up to the bank that issued your card. The Bank can close your credit card account when you file bankruptcy, even if you’ve always had a perfect payment record with that Bank.

But I need to keep a Credit Card after bankruptcy. So how do I do it?

Your best chance of keeping a credit card active after you file bankruptcy will be if you have a Visa or MasterCard credit card in good standing, with a zero balance. If there is nothing owed on the card on the date the bankruptcy case is filed, you stand a very good chance of keeping that account.

Your chances of keeping a card diminish if you owe money to the same bank on a different account, or if the account is a prestige card—such as American Express—or a top end retailer’s account—like Neimen Marcus. You do not get to keep any credit card just because you want to. And even if you have a zero balance, the credit card issuer can still close your account any time it chooses, even if you had a perfect payment record.

Should I pay off a credit card before filing so I might keep it?

Probably not. If you pay off a card and then file your case, the bank might decide to cancel the account anyway. And then, of course, the money you just paid goes down the drain. Also, the bankruptcy law has certain prohibitions that may apply (if repaying $600 or more on any consumer debt within 90 days prior to filing a case) causing additional complications.

A credit card with no balance owing does not have to be listed in your Bankruptcy Schedules–because it is neither a debt nor an asset. But your case filing is no secret, especially in the age of the Internet. Those banks where you have a zero balance will still know that you filed bankruptcy. If a zero balance account issuer wants to keep you, then that is fine. If they decide to drop you, so be it.

So filing accurate bankruptcy papers is very important, right?

Yes! For the Bankruptcy Schedules and other documents to be accurate and complete, everything must be listed with the exception of a zero balance credit card. But even in the case of a zero balance card, the bank/issuer will know that you filed. Do not try to “hide” a credit account or fail to tell your attorney about such an account. And it is usually not a “good bet” to pay down a credit balance to zero before you file, since the card issuer can still cancel your card if and when you file. And payments to that bank within 90 days of your filing might create additional problems.

The penalties for filing inaccurate, incomplete or downright false bankruptcy schedules can range from making you come back to court again and again until you get it finally get it done right, to actually denying you a bankruptcy discharge. Egregious cases might even result in having the matter referred for a criminal investigation. It is a crime to intentionally supply false information in a bankruptcy case.

Ask an experienced Los Angeles Bankruptcy Attorney about your options.

Los Angeles Bankruptcy Attorneys, Bayer, Wishman Leotta has handled 15,000 bankruptcy cases since 1989THE SOLUTION: An experienced Los Angeles Bankruptcy Attorney is your best resource.  Do not make any changes in your financial structure before you have expert, professional legal advice. Bayer, Wishman & Leotta is a Los Angeles Bankruptcy law firm. We have offices in Downtown Los Angeles, the San Fernando Valley and Long Beach. Each Los Angeles Bankruptcy Attorney in the firm is a Specialist in consumer and small business bankruptcy and you may reach us at (800) 477-3111. Check us out on AllExperts.com. We also have a Los Angeles Bankruptcy Attorneys page on Google+.

#credit cards AFTER bankruptcy

The whole point of bankruptcy is to give you a Fresh Start. Misfortune and financial mistakes can strike anyone. Why spend the rest of your life paying for yesterday’s mistakes? Let us show you a better way. We want to talk to you. We have several locations, in Los Angeles, Encino and Long Beach. We don’t charge for a consultation. You can also read our free debt relief guide, at http://www.thebankruptcyguide.net/. You can also learn a great deal from reading Bankruptcy Questions and Answers concerning other people who are going through the same problems that you might have. If so, you will like ASK LEON  on the Nolo Publications bankruptcy blog web site at  http://blog.nolo.com/bankruptcy/. #credit cards AFTER bankruptcy

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Leon Bayer and Jeffrey Wishman are Los Angeles Bankruptcy attorneys. They have been practicing bankruptcy lawyers in Los Angeles for 37 years and are Certified Bankruptcy Specialists by the State Bar of California. These are lawyers who bring experience, skill and creativity to the highly complex area of bankruptcy law. At this Los Angeles law firm, the your initial consultation with an expert is free. Mr. Bayer is a coauthor of Nolo's The New Bankruptcy: Will It Work for You?, authors the “Ask Leon” series on Nolo’s Bankruptcy, Debt & Foreclosure blog, and writes on bankruptcy topics for Nolo’s website. In addition, Mr. Bayer devotes a significant number of hours to volunteer legal services. The State Bar of California has commended Mr. Bayer for this work every year since 2004.