Can I Keep a Credit Card If I File Bankruptcy in Louisville, Kentucky?

If you have made the difficult decision to file for bankruptcy, it is quite likely that you have experienced a number of financial emergencies. It stands to reason that you may want to keep one of your credit cards throughout the bankruptcy process just in case another emergency were to arise. Whether or not you can keep a credit card if you file bankruptcy in Louisville, Kentucky is not a simple question to answer.

First, it is important to remember that you are required to be completely honest when you file for bankruptcy. If you want to keep one of your credit cards you cannot simply fail to disclose that you have it. Doing so is considered fraud. Bankruptcy fraud is taken very seriously and can cause you to incur harsh penalties.

Although you must disclose all of your credit cards, you are often able to keep one of your cards in certain situations. For example, if you have a credit card without a balance that you have paid off a while ago, you may be able to keep that card according to the bankruptcy rules; however, that isn’t always the end of the story. If you are able to keep one of your credit cards without a balance when you file bankruptcy, you should know that there is a possibility that your creditor will terminate the line of credit if your credit agreement allows that. All debts must be listed on the schedule of creditors; however, if you have a zero balance on a credit card it is not a debt and, therefore, is not technically required to be listed. Although your creditor may not receive a notice of bankruptcy, such information is public record. Creditors often check these records to see if their debtors have declared bankruptcy. In some cases, creditors determine that even if your account is in good standing, your bankruptcy record makes you too much of a risk to continue to extend credit.

If you have a credit card that has a balance you may be able to keep it if you reaffirm the debt. This means that you sign a new agreement with your creditor agreeing that the debt will not be discharged with your bankruptcy and that you will continue to be personally liable. However, it is important not to choose just one creditor to pay in order to keep a particular line of credit in good standing when you are declaring bankruptcy. This is because choosing one creditor shows a preference to pay one of your debts. You are not allowed to have a preference when it comes to your creditors. If you were to show a preference by paying off just one creditor the bankruptcy trustee can essentially order those assets brought back into the bankruptcy proceedings so that they can be split among all of your creditors.

Even if you are required to surrender all of your credit cards during bankruptcy in Louisville, Kentucky, a debtor can typically re-establish credit rather quickly. In fact, once you declare bankruptcy there is a good chance that you will receive multiple credit offers and will be able to get another credit card not long after the bankruptcy is discharged.