A common question asked by my bankruptcy clients before filing is, "can I not include one of my credit cards in my bankruptcy and keep it?" The reasons differ. Most people want to keep a card in case of an emergency, or at least for convenience. Some want to keep it for travel. Sometimes, the reason is pure nostalgia. "I've had it since I was a teenager!"
Unfortunately, regardless of the reason, the answer is always "no." Credit cards may never be retained in a consumer bankruptcy. The reason is that creditors of the same class must always be treated the same. If you pay back one credit card, you must pay them all back. If you keep one, you must keep them all. Otherwise, the credit cards not being repaid through your bankruptcy will object to your filing, basically asking, "hey, if they are getting paid, why aren't we?"
Closing out all of your credit cards isn't a big deal in Chapter 7 bankruptcy. You will be able to apply for credit cards several months after filing when your case is discharged. Whether or not you want to may be another issue. Many of my clients profess they never want to use another credit card, and while I encourage them to eventually get one to rebuild their credit, I can understand the sentiment. But, in any case, you will be able to access new credit before very long.
The issue is a bit trickier in a Chapter 13 bankruptcy. These bankruptcies last 3 to 5 years, and you are not permitted to use credit cards during this time. All of your credit cards will be closed. This makes planning and savings important in a Chapter 13 bankruptcy. You will need to maintain savings in case of emergency, as you will not be able to access quick credit. Debit cards will need to be used primarily for convenience (most people don't want to carry around large amounts of cash or trying to pay with checks). The advantages of Chapter 13 bankruptcy far outweigh this inconvenience, but it is something worth planning for and considering.
Not having a credit card for awhile can be an inconvenience in a modern economy, but given the advantages offered by filing bankruptcy, it should be seen as a temporary disruption for the greater good.
Contact us if you are facing large credit card debts. While you can't keep them, it is more important to remember that you can make them go away!