Many individual’s who are in debt, consider filing bankruptcy. One common question that we get is whether they can keep a credit card out of their bankruptcy. Many consumers are under a misguided impression that they are allowed to pick and choose which credit cards they want to include in their bankruptcy. Under the Bankruptcy Code, debtors are required to list all of their debts in their bankruptcy petition. This includes all debts from any sources (ie. tax, student loans, credit card, personal loans, medical bills, etc.)
Sometimes people assume that if they don’t tell us about a creditor, then it won’t get listed in their petition and they will be able to keep the credit card open. Unfortunately, this is not true. Typically, creditors will close an individual’s credit card account as soon as the bankruptcy petition is filed. Creditors who were not listed in the individual’s bankruptcy peittion are still notified of the bankruptcy filing through the credit bureaus. Even accounts that have been paid in full or have zero balances are still closed when an individual files a bankruptcy petition.
The Bankruptcy Court does not allow individuals to leave creditors out of their bankruptcy petition because it wouldn’t be fair. The Bankruptcy Court does not allow preferences. This means they don’t want individuals deciding which creditor they want to continue paying while others are left with nothing. The Bankruptcy Courts want all creditors to be treated equally.
If you are worried about letting a credit card go in a bankruptcy, you shouldn’t be. Many credit card companies are very willing to issue secured credit cards right after a bankruptcy discharge. Many of our clients have gotten credit cards as soon as their chapter 7 bankruptcy has been discharged.
When a bankruptcy petition is completed, the debtor has a duty to ensure that everything in the petition is true and correct. Individuals filing bankruptcy sign a piece of paper that under penalty pf perjury, they have listed all of their debts as required by the Bankruptcy Code. Thus, failing to list creditors would be lying on a bankruptcy petition. This can be deemed as bankruptcy fraud. If you are unsure of all of your creditors, the best way to get a copy is to pull a credit report. Our office always pulls credit reports and judgments from credit card companies to ensure that every creditor is listed.
Bankruptcy is a tool to give individuals relief. Bankruptcy gives individuals an opportunity to start over. Allowing a credit card to be left out of a bankruptcy would be contrary to the purpose of why an individual files bankruptcy. If you have questions about listing debts in a bankruptcy petition, or getting credit cards after bankruptcy, please feel free to contact Karra L. Kingston Esq. at 973-979-9078. or by using our online chat. Karra L. Kingston Esq. helps individuals get out of debt everyday. Karra L. Kingston Esq. is a Staten Island bankruptcy lawyer and New Jersey Bankruptcy lawyer. Karra serves all of New Jersey and the five boroughs.