Bankruptcy and Paid-off Credit Cards

As a bankruptcy attorney, I’m often asked by clients if they are required to list ALL of their credit cards, or for that matter, if they can pay off small balance cards and keep them.   Unfortunately, the answer is most always no.  You are required to list all of your debts in your bankruptcy and it’s not fair to pay off one creditor and not another.  After all, bankruptcy is about equitable distribution to all creditors, so you if you are contemplating filing bankruptcy you’re better off to stop paying and using all of your cards.   While there is no law that says you must list open credit cards with zero balances, the likelihood is that the creditor will find out anyways and cancel your card.   After all, you are bankrupt and that’s a big red flag to creditors.

The object of filing bankruptcy is to get you out of debt and get a fresh start, not to keep cards to incur more debt.  I’m not saying you won’t be able to get credit again after your bankruptcy, you will.   You will more than likely start getting credit offers in the mail shortly after your bankruptcy discharge is issued.  Some creditors actually consider you as a better risk after a bankruptcy filing, simply because you are debt free.  Now it may take some time to get those great interest rates again, but if you diligently work toward paying your debts on time you should be back on track before you know it.

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