Bankruptcy Law Firm in Memphis, TN

There are many positive things about bankruptcy. It allows you to get rid of your debt, placing you in a situation in which you can rebuild your credit rating and regain your financial standing. However, sacrifices usually have to be made in exchange for the benefits you get from filing for bankruptcy, and often, your credit cards are one of those sacrifices. In rare instances, you may be able to keep a credit card after filing for bankruptcy, but more often than not, they will be canceled. 

Why You Usually Can’t Keep Credit Cards After Bankruptcy

When you file for bankruptcy, you need to report all your creditors. This includes any banks or financial institutions that have issued you a credit card on which you owe money. Once a creditor receives notice that you have filed for bankruptcy, they will usually cancel your card. 

There’s somewhat of a gray area when it comes to credit cards on which you hold a zero balance. The law does not require you to report these in your bankruptcy filing as they are not technically debts. However, even if you don’t report them, the card issuer is likely to find out that you’ve filed for bankruptcy because it becomes a matter of public record, and once the company finds out, it may cancel your credit card regardless of the balance. 

It may be possible to negotiate with the issuing company an arrangement in which you can keep your card. You can discuss the matter with the company before filing for bankruptcy to see what options, if any, are available. However, your options are likely to be extremely limited, if not nonexistent. 

Why It May Not Be a Good Idea To Keep a Credit Card

While every situation is different, it is possible that overspending with your credit card and racking up a large balance is at least part of the reason why you decided to file for bankruptcy in the first place. If you retain a credit card after filing for bankruptcy, you may be tempted to fall into the same habits all over again. It may be better for all your credit cards to be canceled so that you can make an entirely fresh start and apply for a new credit card once your situation is under control.

If you’re still confused about the state of your credit cards after bankruptcy, you’re in good company. Even financial experts differ about what alternatives are available. A bankruptcy attorney can examine your individual case and clearly explain your options to you. For more information, contact a bankruptcy law firm in Memphis, TN today. 

Call Darrell Castle & Associates for their insight into bankruptcy law and keeping credit cards.