I often have clients ask me if they can keep a current credit card account by not listing it in their bankruptcy filing. The short answer is no. The Bankruptcy Code includes a requirement that you list in your bankruptcy petition, and by doing so notify, any creditor to whom you owe money. When you file a bankruptcy case, you sign a document that the information you have included in your bankruptcy petition is true and correct under penalty of perjury. This means that if you have not been truthful in your information or have left out required information, you could be criminally prosecuted for that untruthfulness.
But there are still solutions that you can pursue to provide a line of credit that you can utilize, for example, in the event of an emergency. Chapter 7 bankruptcy cases are pending for approximately 3 to 4 months. Even if you must list a credit card in your Chapter 7 that you would have liked to keep out of the bankruptcy proceeding, when you exit the Chapter 7 you can obtain a secured credit card. A secured credit card is where you pay a deposit to the credit card issuer in return for a line of credit equaling the deposit. You cannot generally get in to trouble with this new account because it will likely be a small limit tied to your deposit and if you do not pay the account as agreed, the credit card company simply uses the deposit to satisfy the outstanding balance. In addition, you can research the secured credit cards available to obtain a card where the card issuer will report to your credit report. This will assist you in rebuilding your credit after bankruptcy.
If you file a Chapter 13 bankruptcy petition, you cannot incur new debt while you are in your repayment plan unless you first obtain permission from the bankruptcy court or trustee. However, you can set aside a lump sum of money that you have saved or perhaps received from an income tax refund, for example, in a separate bank account from your primary account. You can then set up a debit card on the new separate account and use the debit card if you experience an emergency or need to pay an expense online.
If you have additional questions regarding what can and cannot be done when filing for bankruptcy relief and wish to consult with a qualified bankruptcy attorney about your options, please contact one of our locations nearest you in Alabama, Mississippi or Tennessee for a free, confidential consultation.