Do banks cancel your card account when you file bankruptcy?

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sAm
 
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Do banks cancel your card account when you file bankruptcy?

Postby sAm » Wed Jan 11, 2012 8:26 am

Hi all, I have an upcoming bankruptcy and so far it sounds like most credit cards will automatically cancel your existing accounts with them (whether in good standing or not) when your bankruptcy is filed.

Does anyone know of any cc companies who do not cancel accounts and thus it might benefit me to keep my account with them current?

Thank you!


DoingHomework
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Postby DoingHomework » Wed Jan 11, 2012 1:01 pm

If you find such a company, which is doubtful, I suspect the first thing you will be required to do when you file teh bankruptcy petition is to close the account or at least not use it until your bk is final.

DavidNY
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Postby DavidNY » Wed Jan 11, 2012 1:32 pm

If you pay certain accounts but not others it may look to the bankruptcy court that you're favoring some creditors over others, which is not allowed and it may decline your bankruptcy on that basis. I recommend consulting with a bankruptcy lawyer.

If you happen to have an open account with nothing due, leave it up to the creditor to decide whether to close the account. The creditor may leave it be, since you can't file for bankruptcy again for seven years or so, and it would be good for you if it remains open since it will help build a credit history.

sAm
 
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Joined: Wed Jan 11, 2012 8:12 am
Location: USA

Postby sAm » Wed Jan 11, 2012 5:48 pm

Thanks for responding. Hopefully I don't run into trouble as my attorney said I could continue paying the ones I wanted to but said just not to continue charging anything prior to filing. No mention of a favortism issue. Will ask about that, although it is too late at this point. The accts. I am continuing to pay on are dr. bills, as I am hoping to reaffirm the debts afterwards so I can continue seeing them but perhaps that is not the best way to go? Feel bad having to file on accounts where I know the people and may need to see them again. :s So, thought I would pay on them what I could afford until I filed. My attorney made it sound like this was up to me.
Thanks again.

DavidNY wrote:If you pay certain accounts but not others it may look to the bankruptcy court that you're favoring some creditors over others, which is not allowed and it may decline your bankruptcy on that basis. I recommend consulting with a bankruptcy lawyer.

If you happen to have an open account with nothing due, leave it up to the creditor to decide whether to close the account. The creditor may leave it be, since you can't file for bankruptcy again for seven years or so, and it would be good for you if it remains open since it will help build a credit history.

DavidNY
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Postby DavidNY » Wed Jan 11, 2012 8:20 pm

Check out http://www.google.com/search?q=bankruptcy+preferential+payments and check with your lawyer to see how this may affect your case.

Bankruptcy entitles you to walk away from most debt at the cost of having the bankruptcy on your record for ten years. I would recommend not reaffirming only certain debts because other creditors may ask why you can afford to reaffirm some debts but not others. If you want to repay every creditor, look at getting a Chapter 13 rather than a Chapter 7 bankruptcy.

The doctor business is just that, a business, and they will write off any losses they incur. Its nothing personal, unless you have a very unusual case. Your provider may be very understanding and continue to provide services to you regardless of whether the cancelled dept is reaffirmed or payed back.

Bankruptcy courts don't like favoritism and neither will the creditors with whom you don't reaffirm your debts if they decide to inquire. Certain creditors are more vocal than others when it comes to bankruptcy, so they may or may not follow up.

DoingHomework
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Postby DoingHomework » Thu Jan 12, 2012 11:29 am

sAm wrote:Thanks for responding. Hopefully I don't run into trouble as my attorney said I could continue paying the ones I wanted to but said just not to continue charging anything prior to filing. No mention of a favortism issue. Will ask about that, although it is too late at this point. The accts. I am continuing to pay on are dr. bills, as I am hoping to reaffirm the debts afterwards so I can continue seeing them but perhaps that is not the best way to go? Feel bad having to file on accounts where I know the people and may need to see them again. :s So, thought I would pay on them what I could afford until I filed. My attorney made it sound like this was up to me.
Thanks again.


Normally a bankruptcy court will include every single payment or transfer of money you make for 6 months before your bankruptcy filing and decide whether it "agrees" with it. That is the window for fraudulent transfers but is sometimes used for all transfers. Routinely paying your credit card should not be a problem but if you owed "higher tier" creditors like a mortgage or student loan that you stopped paying then the court might determine that you did something wrong and have to rectify it.

I agree that you should not close the accounts on your own but I also doubt that many companies will keep your account open either. They might but they will lower your credit limit to whatever your balance is so that you can't really use the card any more.



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