Filing Bankruptcy And Want To Keep A Credit Card?

The bankruptcy law is designed with the purpose of giving an honest debtor a financial fresh start by discharging his debts.

Why then, would someone want to keep a credit card even though they are filing bankruptcy?

To me, it appears the answer is simple: Emergencies. Many people are afraid that if they don't have access to a credit card, they won't have funds for an emergency. This brings to mind my freshman year of college. As an 18 year old, I was taken in by that free t-shirt! I did ask my parents if I should get a credit card. Their answer, "It's a good idea to have one for emergencies". The only thing wrong with this statement, I found that I found myself in a lot more situations I felt qualified as "emergencies", where I would use that dependable credit card.

No doubt, there are legitimate emergencies in life. And, it is nice to have a credit card there to help bail you out of an unexpected mess. But, wouldn't it be even nicer if you could bail yourself out of that emergency situation? Why not take that fresh start you're being offered through the bankruptcy process and use it to rid yourself of the mindset that credit cards are the answer to life's emergencies? After all, once your debts are discharged through the bankruptcy, you are free to pay yourself a "minimum" payment of, say, $100/month and to send that payment to your savings account instead of sending it to the credit card companies. This will also allow you to focus on rebuilding your credit without falling into the same trap.

Within a surprisingly short amount of time, you can create an impressive emergency fund. Get a flat tire? You're covered. Tooth starts aching and need to run to the dentist? No need to pay for that trip to the dentist for a year after your tooth is fixed if you have an emergency fund available to cover the cost.

The court requires that all people filing bankruptcy list every creditor they owe money to on their bankruptcy petition. When signing their petition, I advise all clients filing Chapter 7 or Chapter 13 that they are declaring they have done so under penalties of perjury. I am not an 18 year old college freshman anymore, so as much as I would like to think that my advice is being followed, I know that is not always the case.

Some of my clients, hoping to keep that one credit card, have failed to list that particular card on their bankruptcy petition. However, this plan does not work out. You see, credit card companies subscribe to services that let them know when their customers file bankruptcy. Once they have been notified of the bankruptcy, the customer's account is then closed. So, the bankruptcy filer is unable to use the credit card, and they have not listed the debt on their bankruptcy.

So, create your OWN emergency fund. One that will take your dependence off of that credit card to get you out of a jam and let you rely on yourself, putting you in control of your financial future.

by: K. Hunter Goff

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