A very common question I get when I speak to potential clients is – can I keep one credit card out of my bankruptcy? In short, no. This is due to the fact that you have to list all your debts. This includes unsecured debt, so all your credit cards, and unsecured loans, your tax debt, domestic support obligations, such as child support, and all secured debt, including your home and cars.
A follow up question I get is – the credit card only has a zero balance; do I still have to include it? In these situations, the credit card is most likely going to close when you file your bankruptcy, so yes, you should include it. You are better off including all your unsecured debt, regardless of balances since the ultimate goal of a bankruptcy is a clean slate and a fresh start. Also, don’t try to pay your balances down before filing, since you’re throwing good money out the window on something that is going to go away. So, if you have a balance of $300 on a credit card and you want to pay it off before filing, don’t! You’re basically giving up $300 for no reason. And, if you pay more than $600 to any one unsecured creditor, your trustee could sue that creditor to reverse that transaction, which would basically render your payment and goal as obsolete.
With regards to your secured debt, if you want to keep them you can. However, there may cases where you’ll have to sign an agreement which reattaches your liability to the loan, but for the most part you won’t lose these things as long as you keep making your normal monthly payments on time.
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If you’re thinking of filing for bankruptcy, and or if you have questions or are ready to get your life back, reach out to Minnesota’s nicest bankruptcy law firm by going to www.lifebacklaw.com. You won’t regret it!
