What Happens to Your Credit Cards After Bankruptcy?
Debt Collection Lawyer Tampa, FL
Financial problems are among the most stressful issues people deal with. Mounting doubt can come to a person because of job loss, accidents or serious illnesses, money mismanagement and other factors. Though it is a last resort in most cases, bankruptcy might be the best course for people to get on top of their financial obligations. Many people who file for bankruptcy or who consider this decision wonder whether they can keep credit cards. The answers vary.
Chapter 7
This is the simplest, most common type of bankruptcy. In it, the court will sell the person’s assets and use the proceeds to pay off creditors. The debtor is also free of liability to pay back most of those debts. Higher-earning individuals may not qualify. It is highly unlikely that would be able to retain your credit cards after filing for Chapter 7. Credit card companies will probably cancel the card immediately after finding out you have filed. You won’t able to apply for a new card right away, but the court will determine how long you will have to wait for a consumer card.
Chapter 11
In chapter 11 bankruptcies, you won’t have to sell off assets. This is used primarily for corporations, though married couples can consider it as well. When they file, the court will restructure the organization. The debtor will work with a trustee to repay any debts you have. You must list all debts when filing bankruptcy, including a company credit card. The court will restructure that debt and may allow you to keep it, provided you have worked out a repayment plan.
Chapter 13
This type of bankruptcy is used most commonly used by individuals and companies who want to save their home from foreclosure. The courts will stop foreclosure proceedings, but the person must continue to make payments. During this bankruptcy, the person cannot incur new debt and therefore will not be able to hang onto any consumer credit cards.
The rationale
The purpose of filing for bankruptcy is to give people a fresh start after getting into financial ruin. A credit card can be a tempting way for some people to continue to make unwise purchases and get right back into debt. If you are thinking of filing for bankruptcy, be prepared to lose your credit cards.
Though the thought of going through bankruptcy can be scary, it may make sense in extreme situations. It’s helpful to understand the process and regulations before speaking to a debt collection lawyer in Tampa, FL from Law Office of Michael A. Ziegler, P.L. and going in this direction.
