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Not Including a Credit Card in Bankruptcy filing

Contributor

Not Including a Credit Card in Bankruptcy filing

I'm in the process of finding a lawyer to file Chp 7 and I want to keep at least one card. I'm wondering your thoughts on this. Has anyone ever not included a credit card in their bankruptcy filing just to have at least one credit card? Which card was it and what was the result? Was it automatically closed due to the bankruptcy showing on your report? I'm hoping to keep a more lenient lender like Capital One. Or maybe even my Discover card. Thanks in advance.
Message 1 of 21
20 REPLIES
Valued Contributor

Re: Not Including a Credit Card in Bankruptcy filing

Most lenders will close the card if they see the BK, and they will see the BK during AR soft pulls.

 

Pay the card down and close it yourself and they may not see the BK since you closed the account.  Makes it easier to app for a new card after BK discharge.

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Message 2 of 21
Community Leader
Valued Contributor

Re: Not Including a Credit Card in Bankruptcy filing

I don't think the courts will allow it. Anything you have with a $0 balance should be closed before filing. That will leave them as positive tradelines on your report and possibly help you with your rebuild.


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Message 3 of 21
Contributor

Re: Not Including a Credit Card in Bankruptcy filing

Thanks for the input.
Message 4 of 21
Moderator

Re: Not Including a Credit Card in Bankruptcy filing

The others are right. You can't keep a card because you have to list every account you have - all credit cards, all assets, all liabilities including leases and collection accounts.  You may not have seen the paperwork yet but it is very extensive. http://www.nolo.com/legal-encyclopedia/completing-the-bankruptcy-forms

 

http://www.nolo.com/legal-encyclopedia/can-i-keep-credit-card-in-my-chapter-7-bankruptcy.html

 

As one of the posters mentioned above, the best thing to do is to close your zero balance credit cards before you file Bk.  That way you will preserve the good history and the tradeline won't be marked with "included in bankrupcy".  There are two good reasons to close the zero balance cards before Bk:

  • It may make opening up a cc with that vendor much easier in the future when your Bk is discharged because you show a good history
  • Also the cc is more likely to stay on your credit report longer.  The iib tradelines drop off 7 years from the default date (and Bk filing is considered a default).  The closed TL's not market iib stay on your report 10 years.  
Message 5 of 21
Contributor

Re: Not Including a Credit Card in Bankruptcy filing

Everything has to be included in a Bankruptcy.  There is no way to keep it out and if you hide it they will end up cancelling your bankruptcy on you.

 

The only way to keep it out is to pay it off and then close it, that way it won't be included, though that could look bad too as in how were you able to pay them but you can't pay others when you go and talk to a lawyer.



Equifax - 644
TransUnion - 641
Experian - 639
Message 6 of 21
Regular Contributor

Re: Not Including a Credit Card in Bankruptcy filing

Just be careful about making payments totaling more than $600 to a single creditor, within 90 days of filing, as these payments can be reversed by the panel trustee as preferential payments. If that were to happen, the money would be re-distributed to the rest of your creditors, after a cut for the trustee, of course.

Message 7 of 21
Contributor

Re: Not Including a Credit Card in Bankruptcy filing


leonel9 wrote:

Just be careful about making payments totaling more than $600 to a single creditor, within 90 days of filing, as these payments can be reversed by the panel trustee as preferential payments. If that were to happen, the money would be re-distributed to the rest of your creditors, after a cut for the trustee, of course.


This too, I forgot about that.  They will ding you if you try something like that.  The Trustees don't like to see things like this.  So if you want to keep them out you need to pay them off and wait at least 90 days before you file.



Equifax - 644
TransUnion - 641
Experian - 639
Message 8 of 21
Contributor

Re: Not Including a Credit Card in Bankruptcy filing

I had a 6 month old cap1 QS1 card with a zero balance when I filed chapter 7. It was my only card. My lawyer made me include it and they canceled it. It's listed as paid with no late payments but also listed as closed by Credit Grantor. I wish I had closed it myself so it would say closed by customer. I think it's still a positive TL. It doesn't report as included in BK. I filed on 3/27 and cap1 approved me for a $300 platinum card on 5/5 which was 2 months before the discharge. I think closing yourself would be the best way to go.
Message 9 of 21
Contributor

Re: Not Including a Credit Card in Bankruptcy filing

Actually the advice given isn't entirely accurate. You can safely pay down any card that has a balance of $599 and under within the 6 months before the bk filing without closing the card and hope the creditor doesn't close the card. 

 

And you don't include cards, you include debt. If you don't have debt on a card at the time of the filing then you don't list it in your bankruptcy, which basically has the effect of not being included in your bankruptcy, yes, but you still have to pray the creditor simply doesn't close your card if they see the bankruptcy. However, if you have no debt, it's not likely they will be pulling your report via an account review. 

 

It is extremely important to your credit score to try to have cards survive your bankruptcy. 

Pro Se Chapter 7 discharged July 2015
Message 10 of 21