Can I Exclude A Credit Card From My Chapter 7 Bankruptcy Petition?

One common question that we often hear from our clients who are considering filing for bankruptcy, is whether or not they can exclude an existing credit card from their bankruptcy petition. Some debtors have the misconception that they can pick and choose which debts to include in their bankruptcy petition. The bankruptcy code, 11 U.S.C. § 521, requires that a debtor list all of their debts in a bankruptcy petition. This includes debt from traditional credit cards, department store cards, retail store cards and online credit accounts, etc.

Typically, if they were not already closed by the creditor, a debtor’s credit accounts will be closed after filing for bankruptcy. It does not matter whether the debt was listed in the petition. Creditors who are not listed in the petition are usually informed by the credit reporting agencies that the cardholder has filed for bankruptcy. This includes any accounts that have a zero balance before filing. Filing for bankruptcy is most commonly considered a breach of the cardholder’s agreement and the unlisted creditor will close the account upon notification of the bankruptcy. Furthermore, excluding debts from the petition invites additional scrutiny regarding preferences.

Concern over the ability to obtain a credit card post-bankruptcy is not a valid reason to exclude a debt from a petition. Based upon feedback from our clients, credit card companies have become increasingly proactive regarding issuing pre-approved unsecured credit cards to debtors shortly after a Chapter 7 discharge.

Of additional concern when filing a bankruptcy petition, a debtor states under penalty of perjury that they have listed all of their debts and assets as required by Bankruptcy Rule 1008. By not listing a particular debt, the debt would potentially be committing perjury. One should endeavor to inform their bankruptcy attorney about any and all accounts that in their name. It is also wise to obtain a multi-bureau credit report for additional due diligence regarding one’s debts.

The goal of the bankruptcy code is to provide debtors with a fresh financial start. Allowing a debtor to exclude a credit card when filing for bankruptcy would be contrary to that goal. If you have any questions about bankruptcy, the listing of debts in a bankruptcy petition, or obtaining credit post-bankruptcy, please feel free to contact the Law Offices of David I. Pankin, P.C. at 888-529-9600 or by using our online contact form. David I. Pankin is a prominent Brooklyn Bankruptcy lawyer, serving the 5 boroughs and Long Island.