Often, chapter 7 bankruptcy clients have a strange preconception that they can keep certain credit cards, or credit cards with no ($0) balance.  For example, a few days a go a potential client came into the office to obtain an intake packet.  She mentioned to my paralegal that she planned on keeping a $300.00 credit card she had for “emergencies”, apparently it had a $0 balance.  She said an attorney friend told her that she didn’t need to claim it and she could keep the card to help ‘rebuild’ her credit.

General legal wisdom suggests that you cannot keep such a card unless you have maintained this card at a zero balance for a very long period of time.  However, you may not have to report it along with your list of creditors during filing (really not a creditor unless you owe them money).

If you have recently paid off the balance to said credit card – you may be challenged by other creditors because you CANNOT PREFERENCE one creditor over another (I suspect this is what she did).  A successful challenge by other creditors in the case may result in a dismissal of the bankruptcy case, as this type of behavior is considered illegal and certainly unethical.

In the same way, I doubt she will end up with the card.  Credit Card issuers tend to penalize card holders for filing bankruptcy, even if the bankruptcy does not impact them.  So, more than likely, the credit card will be cancelled shortly after she files for bankruptcy.

They won’t know.., think again, you see, what she doesn’t know, and you NOW know, is that most major creditors subscribe to BANKO®, PACER, or some other service that monitors bankruptcy filings.  For example, this excerpt from Banko®‘s website states, “Banko® helps [creditors] automatically discover, monitor, and manage changes in bankruptcy case information. It searches comprehensive nationwide bankruptcy databases to quickly identify new filings and updates to filings”.  Yeah, they will know…