Bankruptcy and Credit Cards

Can You Keep a Credit Card? Can You Get a New One after a Bankruptcy?

Unmanageable credit card debt is a common cause of many personal bankruptcy filings. But what if you don’t have significant outstanding credit card debt. Maybe you had an injury or illness and required extensive medical care, which wasn’t covered by insurance. Maybe you lost your job or went through a divorce. Can you file for personal bankruptcy and limit the debts included in the bankruptcy estate to non-credit card obligations? If you have to give up your credit card, what are your prospects for getting a new one once you’ve come out on the other side of a bankruptcy filing?

What Happens to Your Credit Cards When You File for Bankruptcy?

There’s no law that requires that your credit cards be canceled if you file Chapter 7 or Chapter 11 bankruptcy, but, as a practical matter, you can expect that your credit card company will immediately terminate all privileges on the card upon notice of your bankruptcy filing. That’s because the bankruptcy filing terminates all financial contracts to which you are a party. Without a legally enforceable agreement, your credit card company risks significant financial loss unless it cancels your card.

What if you simply choose not to include the credit card among the debts you want to discharge or reorganize? If you don’t include the credit card, won’t that contract remain in force? Unfortunately, you cannot pick and choose which debts you must report when you file for bankruptcy. Even if you have no balance whatsoever on the card, you must still include it in your bankruptcy estate. Once it’s in your bankruptcy estate, the contract is canceled, your creditor is notified and the card will likely be terminated.

Can You Get a New Credit Card after Bankruptcy?

Absolutely! In fact, you may be surprised how many credit card companies send you offers once your bankruptcy is done. There are a number of reasons why you’ll suddenly be more attractive to credit card companies:

• If you discharge debt, you should have more discretionary income
• You won’t be able to file another bankruptcy petition for a number of years, so the credit card company has no risk that you discharge any new debt
• Contrary to some popular belief, most people who file for bankruptcy make permanent changes in their money habits. Lenders know this and will be more willing to extend credit to you.

Contact Attorney Howard N. Sobel

At the office of Howard N. Sobel, we provide personal bankruptcy counsel to men and women throughout the state of New Jersey. Contact our office online or call us at 856-424-6400 to set up a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.

Named a New Jersey SuperLawyer Every Year since 2008, Including 2023