A friend of mine is ready to file for chapter 13. He started using a credit card he has never used before. His attorney suggested not to pay for it and the card is listed among the other items he is claiming under bankruptcy.He wants to keep this credit card just in case he needs it in an emergency. Can he still pay the minimum payment so as to keep it even though it is listed in the claims that the attorney has?
2006-08-10 15:26:55 · 6 answers · asked by pmoliva1 1 in Business & Finance ➔ Credit
Keeping in mind that many states have laws that may effect this....and that ultimately it could be up to the trustee.....
Here is how it works where I live.
When you file your BK you must list ALL of your debts. By hiding not including your credit card you are giving prefential treatment to that creditor, and it violates the bankruptcy laws. They must be included.
And once they are included, the day you file for bankruptcy your card will be closed.
I know that lawyers tell their client to just run up their credit cards, even max them out completely. While legally you can get away with this, I find it morally wrong....almost illegal! I was amazed that the new bankruptcy laws didn't address this issue.
Anyway....if you want to keep the card you must have it paid off before your creditors meeting. It MUST have a zero balance. Just to be safe, over pay it on your last payment to be sure you have covered the recurring interest/finance charges. You still have to list this debt, but at this point they will not close your account.
Contact the credit card company and explain what is happening. Tell them that you plan to "reaffirm" the debt, and request that they send your attorney a "reaffirmation letter". You will then sign and return this letter to them, and will be able to continue to use the card. The credit card company will most likely freeze your account until after the creditors meeting.
Note, however, that most trustees have their own rules. Many prohibit you from getting any more credit. If you do you are limited to only $1000, unless you get specific permission from them. The theory is that all of your disposable income is supposed to be going toward your current debts, so how could you possibly afford to get more credit?
Don't try getting sneaky and do this behind the trustee's back. You will end up getting your BK dismissed.
It is suggested that you tell the CC company to limit the credit card to only $250. That will usually be accepted by the trustee, but you may need to show a need for it. Such as for business use, or specific purchases that require a credit card only.
2006-08-11 08:12:23 · answer #1 · answered by Anonymous · 1⤊ 0⤋
To keep the card, it "must" be at $0.00, and show that it is at $0.00 on your friends reports when he/she files.
If your friend had charged $600 or more on the card, it may be a lost cause even if your friend pays it off before filing (if less than 3 months before filing).
Your friend does not need to include the card as long as it is at a 0 balance and it is at 0 balance on the credit reports.
There is a downside though, it is up to the credit card company if they will allow your friend to keep the card after learning of the BK. The credit card company may close the card, hike the interest rate etc. If your friend does not include the card, then goes out and charges on it, if the card company rate jacks him/her, your friend is stuck paying for the purchases at a higher interest rate.
If your friend decides to keep the card and not include it in the BK, tell him/her to use the card very lightly until his/her credit starts to improve.
2006-08-10 16:16:11 · answer #2 · answered by echo 7 · 0⤊ 0⤋
Even if the credit card had a $0 balance at wasn't included the creditor will eventually find out about the BK and may pull his charging privileges anyway.
2006-08-13 03:30:52 · answer #3 · answered by Carl 7 · 0⤊ 0⤋
No. If it is included then you cannot. It is probably better that he tries to rebuild his credit history after filing chapter 13. Within a couple of years he can build up excellent credit.
2006-08-10 15:54:24 · answer #4 · answered by Johnsmatrix 3 · 0⤊ 0⤋
i particularly am no longer all that privy with uk Banking regulation, yet contained in the U. S. the following is the way it particularly works. You write a letter to the mastercard company putting ahead that any and all destiny verbal change will in hardship-free words be common contained in the variety of writing. this can provide up the calls. And, whatever you owe, if anybody comes into your position if you're away till you gave previous consent to attain it is illegitimate.
2016-11-29 21:29:14 · answer #5 · answered by ? 3 · 0⤊ 0⤋
perhaps there's some info here
http://finance.ebookorama.com
and/or this:
http://credit-cards.ebookorama.com
good luck!
2006-08-11 11:45:01 · answer #6 · answered by Anonymous · 0⤊ 0⤋