Credit Cards BEFORE Chapter 7

Anonymous · ‎01-06-2017

I'm considering filing chapter 7. I have several credit cards with $0 balance and never a late payment. These include credit unions, one of which also has car loans, checking and savings accounts, plus discover, chase, etc. At least one where I have two cards with the same bank once with a balance and one without.

Will any of these let me keep my card through the bankrupcy if I decide to file? If they have $0 balance, can I simply not notify them and hope they don't notice my bk?

Am I better off closing the $0 balance cards myself before I file?

What is best for my long term credit?

In general, my score is good and have maybe 1 negative on my credit. Anything else I should do now to minimize damage or recovery time from ch7?

NRB525 · ‎01-06-2017

Someone can correct me if I am wrong, but my impression of the BK process is that they crawl up into your nether reaches and you have to list every debt, every asset down to the carrots in your refrigerator, and then they let you keep a little spare change.

I would not think any existing cards would survive.

How much is is your outstanding debt? There is no way to work through it and adjust your budget on your own?

I looked into BK when I had nosebleed high balances, but came away with the impression I would pay more for the Administrator, not have control of my finances, and with careful budgeting could figure it out on my own. That is not always an option for everyone, but I was fortunate enough to be able to get through it without BK 13.

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
April 2022 EQ=811 TU=807 EX=805 - TU VS 3.0 765

Anonymous · ‎01-06-2017

This is correct - You list every single debt you have, every single asset you have. I was doing a small IT job at a bankruptcy law office a few months ago and was overhearing some of the stuff they were going thru with a client. They wanted to know how many dishes they had, how many blankets were on the beds (How many beds were in the house)... Etc... You will not get to "pick and choose" which credit cards you keep and what you want to have discharged. ALL of your debt liabilities will be included as part of the bankruptcy process.

Pway · ‎01-06-2017

As each of the posters have stated and they are correct. You cannot pick and choose who you want to file on and keep. Each of your lenders will be notified of the filing whether they have a balance or not.

Thank you for the wealth of knowledge I have learned from these forums. I am logging off as of November 9, 2022. I wish everyone great success.

DaveInAZ · ‎01-06-2017

@Anonymous wrote:
I'm considering filing chapter 7. I have several credit cards with $0 balance and never a late payment. These include credit unions, one of which also has car loans, checking and savings accounts, plus discover, chase, etc. At least one where I have two cards with the same bank once with a balance and one without.

Will any of these let me keep my card through the bankrupcy if I decide to file? If they have $0 balance, can I simply not notify them and hope they don't notice my bk?

Am I better off closing the $0 balance cards myself before I file?

What is best for my long term credit?

In general, my score is good and have maybe 1 negative on my credit. Anything else I should do now to minimize damage or recovery time from ch7?

As I posted in a thread with a similar question, in filing BK you must list every debt and asset. But a crredit account with $0 balance is neither a debt nor an asset, and accordingly does not need to be listed in your filing. Now if you have two cards with the same bank, one with debt and one with a $0 balance they will be notified of your filing and will immediately close the $0 balance account. If you have just 1 account with a lender with a $0 balance the court will not notify them, but BK filings are public records and posted in newspaper legal notices, so if the lender is located in the same city where you filed they may learn of the filing & close the account. In my 2010 BK7 filing I had 2 accounts with $0 balance. Lowes store card which Synchrony closed when they received notice on my other accounts with them with balances & included in BK. But it is a "postitive" account on my CR, noted as "paid as agreed, closed by credit grantor". The other was Bill Me Later, now PayPal Credit, issued by Commenity Bank. I had no other accounts with them, they did not learn of my filing and did not close the account. I still have the account today.

As to the credit union where you have a car loan and checking & savings accounts you need to be very careful with that one, whether you plan to reaffirm the car loan or not. Most credit unions will never do business with you again unless you (voluntarily) repay any amount they lost in your BK. And they usually have wording in your loan documents that they can sieze any $$$ you have on deposit with them to offset loan balances in a BK or default. Before filing you should open bank accounts with a bank or CU that you have no other accounts with, and close your checking & savings at that CU. If your credit card with them has a $0 balance then close it as well - they will be notified because of the car loan.

And be careful not to "play favorites" and pay off one CC to get it to a $0 balance. The BK Trusteee will review your spending for several months prior to filing to see that you didn't favor one lender over another. A common violation is to repay a loan to a family member or friend prior to filing. If a Trustee catches that they can force them to return the money to be distributed evenly among all creditors.