Can I Keep Credit Cards While I File for Bankruptcy?
Many people resort to bankruptcy when their financial struggles become overwhelming. Filing for bankruptcy will freeze your credit file, which means you can’t apply for new credit until your case has concluded. This is why people planning on filing for bankruptcy prefer to keep their credit cards. However, once a credit card company finds out about the bankruptcy, it will cancel the credit card.
Will My Credit Card Be Canceled When I File for Bankruptcy?
Regardless of how essential your credit card might be, you do not have the option of excluding any type of debt when you file for bankruptcy. You are legally required to disclose your debts in the bankruptcy paperwork. This means that all your creditors, which include your credit card company, must be listed in your petition. This requirement applies even if you have zero balance on your credit card when you file your petition.
Keep in mind that your credit card account is essentially a contract, and all financial contracts, such as leases, credit cards, car loans, etc., will be automatically canceled during bankruptcy. Because of this benefit, when your credit card provider learns about your bankruptcy, it will automatically cancel your credit card since you no longer have a contract with them, meaning that it can no longer enforce your obligation to pay your credit card.
Will My Corporate Credit Card Also Be Canceled During Bankruptcy?
The answer to this question is “It depends.” During bankruptcy, you will only have to disclose a corporate or company credit card if you are liable for the balance. Take note that company cards typically come in three varieties depending on who is liable for paying the account:
- The employee receives the card’s monthly statement, pays for the balance monthly, and seeks reimbursement from their employer. This means they are liable for the account balance.
- The employer receives the monthly statement and pays the bill.
- The employer receives the card’s monthly statement. However, they reimburse their employer for personal expenses they charged to the card.
Depending on the type of credit card you have, you are required to list it only if you are personally liable for it. If your employer pays for the balance, and you’re not financially responsible for it, you don’t need to list it. Likewise, if your employer just handed you the card and told you what you could charge to it, you are probably not personally liable for the card.
On the other hand, if you filled out an application for the credit card and went through the entire application process similar to the process you went through with your personal credit cards, you’re probably liable for that card and must disclose it during bankruptcy. If you disclose the card when you file for bankruptcy, the lender will cancel it but expect payment from your employer (as the co-borrower) if you have a balance on that account.
Reach Out to a West Palm Beach Bankruptcy Attorney Today
To learn more about bankruptcy and how it can help you, contact our West Palm Beach bankruptcy attorney, Brian McMahon, today. You can arrange a free case review with our West Palm Beach bankruptcy attorney by calling 561-658-1789 or reaching us online.