Filing for Bankruptcy
When you file for bankruptcy, your credit cards may be canceled. Despite this, you are likely to have another card in due time. Here are some details you should know regarding your financial situation and future association with credit card companies.
Why Your Credit Cards Are Being Canceled
Filing for bankruptcy requires that you list every type of debt you hold. For most Americans, that includes credit cards. It is tempting to ask for an exclusion based on the importance of a particular account. For instance, you may have a card that’s specific to home office expenses, or you only make charges when paying for vital medicines. No matter the reason for your debt, your cards will be vulnerable.
As a matter of fact, even if you owe nothing at all on your credit cards, they must be listed on your petition. All types of financial contracts are canceled once you are cleared for bankruptcy, and revolving credit is considered a type of contract. Because your credit card company can no longer enforce its right to make you pay, it is likely to terminate your access.
Whether Your Corporate Card Is at Risk
You may need to report your business card along with the rest of your liabilities. If you are an authorized user, this shouldn’t be a problem. Because the company you work for is paying your charges, you will likely be able to continue using your card. Alternatively, if you’re what’s known as an obligor, meaning you are at least partially responsible for paying down the balance, your corporate card will probably be revoked.
When You’ll Be Offered Another Credit Card
Believe it or not, it is entirely possible that you will receive offers for new cards within months of your bankruptcy. There are several reasons why. One is that bankruptcy clears your debt. This means you suddenly have discretionary money where before there was none. Crediting agencies also know that you’re more likely to be cautious, having already been through the bankruptcy process. Further, you must wait eight years before you can refile for Chapter 7, giving credit card companies plenty of time to pursue what you owe them.
Losing credit cards often happens after filing for financial protection. The good news is that past balances will be wiped clean, and you should be able to land new credit cards in short order. Work with a bankruptcy lawyer to make sure all your debts are properly listed within your disclosure report.