Can I Keep One Of My Credit Cards When I File For Bankruptcy?

Can I keep one of my credit cards when I file for bankruptcy?

A common question heard by bankruptcy attorneys and a common temptation.

And understandable!

In today’s world, it is almost impossible to rent a car or reserve a hotel room without a credit card.

Sure, you can use your debit card, but many hotels and rental car agencies take a deposit that is larger than the estimated charge when you use a debit card, and this ties up money that you would otherwise have available to you.

And what about that “emergency” that you may have that requires a credit card?

The answer to whether you keep one of your credit cards when I file for bankruptcy is no.  There are both legal and practical reasons for this:

• Under the Bankruptcy Code, you cannot favor one unsecured creditor over another.
• The company that issued the credit card will know almost immediately that you have filed for bankruptcy through a notice from one of the Credit Reporting Agencies (Equifax, Experian or Transunion).  When the credit card company learns of your bankruptcy, it will cancel the credit card.
• Credit cards are one of the major reasons why people end up filing for bankruptcy!  Do you really want to keep a credit card and start incurring debt again?
• When you file a bankruptcy you must list all of your assets and debts.  Failure to do so can result in your bankruptcy being delayed, or dismissed, and if the Bankruptcy Court determines that you were attempting to commit a fraud on the court, the failure to list the credit card could result in fines or jail time.

The above list is not exhaustive, but the bottom line is:  Don’t try to keep a credit card when filing for bankruptcy.   Tell your attorney about all of your debts.