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Can I Keep A Credit Card After Bankruptcy?

by | Aug 14, 2017 | Bankruptcy |

Can I keep a credit card after I file bankruptcy? Unfortunately, the answer is most likely, no. If you file Chapter 7 Bankruptcy, (the most commonly filed chapter), then it’s a matter of negotiation between you and the creditor. Debts can be voluntarily “reaffirmed” by a Debtor only if the Debtor and Creditor agree.  Reaffirming creates a legally binding obligation to repay the debt after the bankruptcy is over.

Before bankruptcy laws changed in 2005, most major credit card companies would agree to allow a Chapter 7 Debtor to reaffirm) a credit card and would give you a credit line, as long as you agreed to repay the balance. The bad news is that post-2005, major credit card companies will no longer agree to allow you to reaffirm a credit card debt in a Chapter 7.

Why would a bank refuse an agreement to repay credit card debt One reason is that banking regulations require banks to “write off” a certain percentage of debt on their balance sheets. Regardless of the reason, it’s not all bad news. First, after a Chapter 7, your credit score is likely to rise; you have eliminated debt, and retained assets, so your debt to income ratio is better. Second, credit card companies are more willing than ever to issue credit cards to Chapter 7 debtors-you can’t refile Chapter 7 for another 8 years from the date you filed, so chances are you’re going to pay off any new credit card debt in order to rebuild your credit.

If you’re considering filing bankruptcy, don’t go it alone-seek some good advice to see if bankruptcy is the right option to you.