2018’s Best Bankruptcy Credit Cards

What happens to a credit card that you get soon before filing bankruptcy?

Last decade, Congress imposed new restrictions on the ability to discharge credit card debt in bankruptcy. Debtors who increase credit card spending with bankruptcy on the horizon will find it difficult to discharge the debt, especially if the debt is incurred for non-essential, "luxury goods or services" (a phrase in the Bankruptcy Code used in connection with credit card debt). It is still possible to discharge credit card debt, but not if the debtor is viewed as someone who tried "to game" the system by incurring credit card debt with the hope of avoiding payment in a bankruptcy proceeding.

What happens to a credit card that you get soon before filing bankruptcy?

Most companies will cancel your card once you file for bankruptcy.

Can you get a credit card during bankruptcy? Is there a difference between Ch. 7 and Ch. 13?

You can. Bankruptcy discharges debts incurred prior to the filing for bankruptcy. It does not wipe out debts incurred while a debtor is in bankruptcy. For this reason, card companies are more willing to issue a card after a bankruptcy petition is filed. Not all companies will issue cards to those in bankruptcy, but there is generally an increase in availability. Credit card companies often view people who have completed their bankruptcy proceedings as better credit risks than they were before the bankruptcy petition was filed. The bankruptcy proceeding reduced the other debt that the person had incurred, so there is a bit less competition for available earnings. Also, if a person used Chapter 7 to discharge debts, he or she cannot file a Chapter 7 case for another 8 years. This means that the credit card company can extend credit without having to worry about seeing that debt discharged in a Chapter 7 case.

How do your credit card options change after bankruptcy proceedings are complete?

While a bankruptcy filing means that the customer cannot file for Chapter 7 again for a number of years, it does indicate that the person has a history of borrowing more than they can repay. For this reason, the offers that the person may receive may have low limits, high interest rates, or both. For some, they may be forced to procure a secured credit card.

Is there a difference between secured and unsecured credit cards when it comes to bankruptcy?

With a secured card, the customer has to usually put down a deposit with the card issuer equal to the limit on the card. The card issuer will offset the deposit against any unpaid charges on the card. The customer will only get back what, if anything, is left. With the unsecured card, the card issuer is just an unsecured creditor, and will likely receive little payment on the outstanding debts.

Can you keep a credit card during bankruptcy if it doesn’t have a balance when you file?

If the person is not discharging debt associated with that card, the credit card company may decide to allow the customer to keep the card. Still, the card issuer usually has the right to terminate the card if it wants to.

What happens to a credit card that you get soon before filing bankruptcy?

Any debts that you take out prior to filing bankruptcy are part of the bankruptcy case. If you owe any money on the credit card, that amount will be a debt that generally will be discharged in the bankruptcy case, meaning you will no longer owe that amount after the bankruptcy case ends.

Can you get a credit card during bankruptcy? Is there a difference between Ch. 7 and Ch. 13?

If you file Chapter 7, you can get a credit card after you file bankruptcy, during the bankruptcy case. In fact, credit card companies likely will send you credit card applications after you file. If you file Chapter 13, credit card companies will also likely send you credit card applications after you file. However, Chapter 13 cases involve a repayment plan that lasts three to five years. It generally is not advisable to take out new credit during those years. If you decide that you need to get a new credit card, you will need to ask the trustee overseeing the case and the bankruptcy judge.

How do your credit card options change after bankruptcy proceedings are complete?

Your credit card options generally change a little after the bankruptcy case is complete. Depending on your credit score when you filed bankruptcy, the interest rate and other terms of credit cards offered to you may change. If your credit score was rather high before you filed, the interest rate offered my increase. But if your credit score was rather low before you filed, you may find that the interest rate is the same as offered prior to your filing, or even that it is slightly lower.

Can you keep a credit card during bankruptcy if it doesn’t have a balance when you file?

You cannot keep a credit card during bankruptcy. All your debts incurred prior to the bankruptcy generally will be discharged at the end of the case. This includes credit cards with zero balances. And as a debtor, you are under a legal duty to disclose all your debts to the bankruptcy court when you file. But this should not worry you. Credit card companies generally will be eager to extend you credit after your case ends.

What happens to a credit card that you get soon before filing bankruptcy?

Often, a credit card company that receives notice of a bankruptcy will automatically cancel the card. Charges for purchases done just before the filing of a bankruptcy are subject to being nondischargeable. For example, a bankruptcy court could determine that charges accrued before a bankruptcy without intent to pay for them were incurred with fraudulent intent; and therefore are not dischargeable. Moreover, consumer debts to any single creditor in excess of $675 that occur within ninety days of the bankruptcy filing are presumed to be nondischargeable.

How do your credit card options change after bankruptcy proceedings are complete?

After receiving a discharge in bankruptcy, you will likely receive offers to obtain credit cards. Cards offered to people who have a bankruptcy on their record will typically have higher interest rates and lower credit limits than for people who have not filed for bankruptcy relief. Secured credit cards offer a way for those who have received a bankruptcy discharge to re-establish their credit.

Can you keep a credit card during bankruptcy if it doesn’t have a balance when you file?

If credit card companies receive notice of a bankruptcy, they will often cancel the debtor’s card even if the card has a zero balance.

Can you keep a credit card during bankruptcy if it doesn’t have a balance when you file?

Generally, you can’t keep credit card accounts during bankruptcy; active accounts, even with a zero balance, need to be listed in bankruptcy paperwork. It may be possible to obtain a secured card during bankruptcy, depending on the circumstances. After bankruptcy proceedings are complete, it should be possible to open credit cards, both unsecured and secured, although they will probably come with high interest rates and fees. Secured credit cards will probably have better interest rates than unsecured after a bankruptcy.