Can I keep a credit card through bankruptcy?

October 13, 2012

Despite dire financial circumstances, some people have a very difficult time letting go of the false sense of security that having a credit card provides. Clients often ask me if it is possible to keep just one card.

The answer is, probably not. Generally credit card issuers subscribe to electronic notification services that alert them when a cardholder has filed for bankruptcy. Whether or not you owe a balance on the card, chances are that the credit card company will shut off access to the account, regardless of your desire to maintain a relationship with that company. This can happen without any notice to you.

You don’t want to find yourself at the gas pump with an empty tank of gas and no cash in your wallet, only to realize that the gas card can no longer be used.

I have even had clients use the last of their savings (without telling me) to pay off a credit card in hopes of being able to continue to use the card after bankruptcy. These people are often very disappointed to learn that their account has been closed anyway.

Most people will begin to receive credit card offers within weeks of receiving their bankruptcy discharge. What most people don’t realize is that credit card companies are very anxious to lure bankrupt debtors back into the world of high-cost credit.

While having one credit card can be beneficial to rebuilding credit, having a savings account to rely on for emergencies is a far better road to take. If you cannot afford to save, you cannot afford the high fees these credit card companies will charge.

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