Will I be forced to close all credit accounts in a bankruptcy?
Once I file I'm sure 1 or 2 of them will probably close the cards automatically due to credit reasons, but if by chance they don't will the court make me close them or will I be able to keep them open?
Answers:
I have said this to many other people, filing bankruptcy does not equal being bankrupt...you are not bankrupt until a judge hears your case and declares you bankrupt...the judge can deny your claim for bankruptcy. Your lawyer will let you know what the chances of this happening are...
You need to understand that a judge may not declare bankruptcy if you have the ability to pay credit cards in full. They pull your credit report and see everything on it and the payment history, so you can't hide it. Assuming that they allow you to file and your bankruptcy is discharged, as long as you didn't include the credit cards in the bankruptcy they will not have to be closed. You may however find the intrest rates will go up dramaticly because many have clauses that allow them to raise the interest rates based on your payment history on other loans (not fair, but it happens).
Good Luck
If you have a zero balance then they don't have to be included in the bancruptcy. The only ones you really have to report are the ones you want to have the courts dismiss for you the ones with a balance.
do not include any cards with zero balance in the bankruptcy...and by the way...you only include debts you want discharged.
lets say you have an automobile installent loan...if you include it in you bankruptvy...file an affimation request and you get to keep the car...but still make the payments.
there are debts you might not want to include in bankruptcy, such as a personal loan from a friend or relative, or of the such. YOU decide what you want to write off.
Just remember...it will take three years to start improving your credit...and ten years for it to come off your credit report. So keeping cards with zero balances out of the bankruptcy might be a good idea...since getting credit will be difficult in the near future.
I have worked with a lot of people on credit issues, and have followed their bankruptcies...so here are my observations. Keep in mind that every state has different rules, every court can be different, and every trustee can impose their own rules too.
Many court will order you not to get any more credit until you have been discharged. The theory being that all of your disposable income is supposed to be going to pay your past debts, so how can you afford to get more credit?
Our local trustee makes all Chapter 13's cancel all credit cards. If you need to get credit for an emergency, you must get trustee/court approval, and it can't be more then $1000.
Also, once a bankruptcy is filed, it becomes public record. All of the major credit card companies monitor those records, and as soon as you file they will automatically cancel the cards. Or at best they notify the lending institution and they can decide what to do.
That said, what I have recommended these people do (and it has been successfull) is people filing chapter 13 contact one of their banks and try to get a reaffirmation agreement. The card MUST be paid off and you can't use it again until after the creditors meeting when the "plan" has been confirmed. Don't expect a large credit limit, you are lucky to get a card at all. So shoot for $500 for now.
Then as you proceed through your bankruptcy, use the card regularly and PAY ON TIME!. Every 6 months contact the bank and see if they will gradually increase your credit limit.
I have found that credit unions are more willing to do this then the larger banks. Banks seem to immediately rubber stamp your request once the see the bankruptcy on your records.
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