Can I Keep a Credit Card After Bankruptcy?

If you are filing for bankruptcy, you should know that it’s sometimes difficult to obtain unsecured credit after you file. You may wonder whether you can keep a credit card after bankruptcy to use in emergencies. The answer is that you may be able to keep a credit card after bankruptcy under certain circumstances, but not in all situations.

Can You Keep a Credit Card After Bankruptcy?

Whether you can keep a credit card after bankruptcy depends on several factors. The main factor is the type of bankruptcy that you file. Whether the credit card has a balance is important, too. Finally, the lender must be willing to allow you to keep the credit card after bankruptcy.

If you file for Chapter 7 bankruptcy, then you must list all of your debts and assets. If your credit card has no balance on it, then you do not need to list it as a debt. And the lender may allow you to keep the card. On the other hand, the lender may choose to cancel it as a result of your bankruptcy.

If all of your credit cards have a balance, then you cannot and should not keep a card in the Chapter 7 filing. The debt on the card will be discharged after creditors are paid any money available that the trustee determines should go to the creditors. The lender who issued the credit card is almost guaranteed not to get full payment of the debt and the card will be closed as a result of the bankruptcy.

If you file for Chapter 13 bankruptcy, you are generally not permitted to borrow more money without the court’s permission. As such, you cannot keep a credit card after bankruptcy if you file under Chapter 13, also known as reorganization.

But Should You Keep a Credit Card After Bankruptcy?

You may want to keep a credit card after bankruptcy. You must, however, disclose all of your debts during your bankruptcy to avoid bankruptcy fraud. You also should not want to keep a card that has a balance. After all, the point of your bankruptcy is to start fresh with a clean slate. You don’t want to get rid of some debts and allow others to remain.

Consider, also, that you can get another credit card after bankruptcy. You may choose to obtain only a secured credit card. A secured card will allow you to start improving your credit score without having to worry about trying to keep a credit card after bankruptcy. Be careful to pay the balance, in full, of any credit cards you obtain after bankruptcy. This will help you build positive credit and keep you from falling back into a debt trap that may have led to the bankruptcy in the first place.