Filing for bankruptcy can feel overwhelming, especially when you're uncertain about what will happen to your financial tools, like credit cards. These concerns are valid, and understanding the answers can help ease your mind. One common question we hear at The Law Offices Of Mayer & Newton is, "Can I keep my credit cards if I file for bankruptcy?" The answer depends on your circumstances and the type of bankruptcy you file. Let's break this down.
How Bankruptcy Affects Your Credit Cards
Whether or not you can keep your credit cards hinges on several factors, including the type of bankruptcy you choose and the creditor's decisions. Generally:
- Chapter 7 Bankruptcy: With Chapter 7 bankruptcy, unsecured debts, including credit card balances, are typically discharged. If you owe money on a credit card, it will likely be included in the bankruptcy filing, and the account may be closed. Even if you have a card with no balance, creditors often close accounts as a precaution once a bankruptcy is filed.
- Chapter 13 Bankruptcy: When filing Chapter 13, you create a repayment plan to address your debts. Credit cards with balances will be part of this plan. Similar to Chapter 7, even cards with a zero balance can be frozen or closed by the issuer to avoid future risks.
Creditors have significant discretion in determining whether you can continue using credit cards after a bankruptcy filing. Some creditors may allow you to keep and use a card if there's no outstanding balance and your bankruptcy trustee approves. However, this scenario is rare.
Why Holding Onto Credit Cards May Not Be Ideal
Even if keeping a credit card seems possible, consider this carefully. Credit card debt often contributes to financial hardship, and having credit cards post-bankruptcy could lead to similar challenges. Bankruptcy is an opportunity for financial recovery, allowing you to rebuild with better habits and a fresh start.
What Are Your Options?
After filing for bankruptcy, you can begin reestablishing credit through alternative means, such as secured credit cards or low-limit accounts specifically designed to help rebuild credit responsibly.
A Fresh Start with Experienced Guidance
Filing for bankruptcy can feel like a significant step, but you don't have to face it alone. At The Law Offices Of Mayer & Newton, our experienced team will guide you through every detail, helping you understand your options and take control of your financial future.
If you're ready to explore your bankruptcy options and create a path toward financial relief, contact us today. Call (865) 328-7993 to schedule your free consultation. Take the first step toward a brighter financial future.