When considering options prior to filing for bankruptcy, there is one basic concept that is frequently overlooked: ALL debt should be included in your bankruptcy filing. This holds true for bankruptcy and credit cards as well. Even after the question has been asked and answered many potential bankruptcy filers have additional questions.
Questions I hear the most often when talking to potential filers:
“If I close a credit card account voluntarily, can I later decide to include it in my bankruptcy?”
Yes, again, all debt should be included whether you are actively accessing it or not. Regardless of whether the account is open or closed, full or carrying a minimal balance, the court wants to see it included in your accounting of your debts.
“If I do NOT list one credit card account in the list of creditors for my bankruptcy, will that creditor still allow me access to the credit after my bankruptcy if I’m able to keep up on the payments?”
No. Regardless of whether the exclusion of the credit card account from your list of creditors is intentional or unintentional, they will receive the information regarding your bankruptcy and close the account. Most creditors don’t need to receive an official notice of bankruptcy; they access cardholder credit reports frequently enough to stay on top of this type of public information. In addition to regular credit checks for account holders for credit line increases, etc. many creditors process payments through one centralized company. For instance, GE Money Bank, Citibank and Wells Fargo (to name just a few of the big ones) all process payments on behalf of various companies in addition to those for their own cardholders. All accounts are frozen and closed as soon as notice of bankruptcy is delivered to or discovered by your lender/s even the accounts in your name that carry $0.00 balances. The only major exception is credit received through a credit union. There is potential for keeping a credit union account even after including it in your bankruptcy, but you must work directly with your credit union to figure out what the exact possibilities are in your situation.
Do I need to include debts that I know I won’t be able to have discharged?
Yes. ALL debts should be listed in your list of creditors, including student loan balances, delinquent income taxes, delinquent alimony/child support, criminal restitution, etc. Even if you can’t wipe them out with a bankruptcy, you need to include them. Even the $500 you borrowed from your trust fund college roomie (who regularly declares that if you make a random phone call on their behalf, your debt is cleared) needs to be included in your list of creditors.
Don’t worry. Bankruptcy laws are in place to benefit you. You will have plenty of opportunities to reestablish your credit post-bankruptcy. Once your bankruptcy is over and your discharge is received, you’ll even see some of the same creditors included in your recent discharge offering you new credit. The bankruptcy is designed to help you start over with a clear slate. Take the opportunity to put the past behind you and move on. The first step – do not attempt to keep any of your credit cards out of your bankruptcy. For advice on how to get to that point, contact the Southern California bankruptcy experts at Westgate Law.