Can I keep the Credit Cards I Pay off before I file for Bankruptcy in New York?

Consumer bankruptcies are filed in order to eliminate credit card bills, medical bills, and other toxic debts.  Most of our clients in New York are happy to get rid of their credit cards in their bankruptcy knowing they will have a fresh start and a chance to wisely manage their finances next time around.  It makes sense for some people to want to keep at least one credit card out of their bankruptcy for emergencies or for purchases that require a credit card.  The credit card is the new savings account for most Americans, so wanting to hang on to this safety net is only human nature.

It would seem to make sense that if you have a zero balance you should be able to keep that card out of a bankruptcy if you choose to.  Since you would not be seeking to eliminate any debt many people think they can keep the card.  Some of our prospective clients believe this and we hear things like, “I want to keep that card, so I’m not going to put it in the bankruptcy,” or, “that one is paid off, so I’m not planning to list it.”

When you file for bankruptcy you are required to list all of your debts in your bankruptcy petition, not just the debts you are hoping to eliminate.  While technically you would not have to list a card with a zero balance since it has no debt, you will still likely lose this credit card even if it is not listed on the bankruptcy petition.  This is because credit card companies have agreements that explicitly state the line of credit will be terminated if you file for personal bankruptcy.  Since card companies check the credit reports of their clients on a very frequent basis it wouldn’t be long before they discovered your bankruptcy and closed your account.

Having a credit card in New York City is hard to live without, so what’s a person to do when they discover they will not be able to keep their credit cards in bankruptcy even if they are paid off?  What we stress to our clients is that while you will lose the cards you have now, usually you will be offered new credit cards shortly after your bankruptcy.  Granted these offers are usually high interest and low limit but they will help you rebuild your credit, and will be there if needed in a pinch.  It’s important to remember also that after bankruptcy you will no longer have the problem of your high interest bills eating away all of your monthly income.  With your fresh start and all of your toxic debt eliminated you will be in a position to finally live without credit cards.  Don’t let the fear of losing a credit card keep you from the financial fresh start you deserve.

If you live in New York and need to find affordable bankruptcy help please give the Law Offices of William Waldner a call at 212-244-2882 to arrange a free bankruptcy consultation.   We will help you find the financial freedom you deserve, and will help you find a way to manage your finances without being a slave to high interest credit cards.

This article is intended for educational purposes only.  By reading this article no attorney-client relationship has been created.