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  1. #1

    Default Keeping and Retaining Unsecured Credit Card After Filing

    My question involves bankruptcy in the state of: California

    Hi, I haven't used this site for a while, but I'm in the process of filing chapter 7. BTW, I am using the current "Nolo Press: How to File Chapter 7" book and I'm planning on doing it "Pro Se" or without an attorney since I think my case involves just simple unsecured debt from credit cards. Anyways, let me get down to it with my questions:

    Background
    I have 5 credit cards total with ~ $38k balance, which is about 90-95% of max limits (total of all cards). All are for purchases - no cash advances, BTW. I have also been on time with all payments and have never been late. Since it may take a year or more after filing to get approved for an unsecured card, I would like to keep one of the cards which has a purchase balance of only $500, for which I currently owe about $225. The reason I want to keep the small card is for making hotel/motel/airline car rental .... even "Rug Doctor at Home Depot" reservations, which can all be hard to do without a (unsecured?) credit card. I don't plan on being rich after filing it's just that I'm trying to avoid this inconvenience if possible.

    Note: I have another card with the same creditor (Chase) with a balance of about $12k that DO want discharged.

    Q's
    Can I pay the $225 to give it a $0 balance and not list it on schedule F (the list of creditors)?
    What would happen if I paid it, and then filed my chap 7 within 60 days after?
    Is the $500 balance or the $225 payment considered immaterial?
    Does this look I am giving "preference" to creditors in the eyes of the court, or will this matter?
    Also, assume I can do this, what would the creditor likely do? (e.g. - discharge the card anyway, or let me keep it but change the terms to high % rate? (e.g. - their default rate)

  2. #2
    Join Date
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    Default Re: Keeping and Retaining Unsecured Credit Card After Filing

    Quote Quoting gonzodude
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    Can I pay the $225 to give it a $0 balance and not list it on schedule F (the list of creditors)?
    No.

    You would have to list all your creditors, even those with zero balances.

    Quote Quoting gonzodude
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    What would happen if I paid it, and then filed my chap 7 within 60 days after?
    You would be favoring one creditor over the others and that's a violation of the bankruptcy code. The trustee could, theoretically, demand the money back from the creditor, or just dismiss your bankruptcy. Might not happen for such a small amount but you would have to reveal that you did it so there's a risk.

    Quote Quoting gonzodude
    View Post

    Is the $500 balance or the $225 payment considered immaterial?
    Nothing about your finances is immaterial in bankruptcy.

    Quote Quoting gonzodude
    View Post
    Does this look I am giving "preference" to creditors in the eyes of the court, or will this matter?
    Yes.

    And it could matter in a big way.

    Quote Quoting gonzodude
    View Post

    Also, assume I can do this, what would the creditor likely do? (e.g. - discharge the card anyway, or let me keep it but change the terms to high % rate? (e.g. - their default rate)
    Well, the creditor gets listed on your bankruptcy forms so the creditor gets notice of your bankruptcy filing. Then it's up to the creditor what to do next. It's almost a given that your interest rate would be the default rate and you might be prevented from continuing to make charges on that account.

    - - - Updated - - -

    Quote Quoting gonzodude
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    Note: I have another card with the same creditor (Chase) with a balance of about $12k that DO want discharged.


    You don't get to pick and choose what gets discharged and what doesn't.

    - - - Updated - - -

    Quote Quoting gonzodude
    View Post
    The reason I want to keep the small card is for making hotel/motel/airline car rental .... even "Rug Doctor at Home Depot" reservations, which can all be hard to do without a (unsecured?) credit card. )
    Once all your debts are discharged you can look into putting up some cash for a secured credit card if you have to.

  3. #3

    Default Re: Keeping and Retaining Unsecured Credit Card After Filing

    OK, thanks for clearing things up for me. In the Nolo book, it does mention that you don't have to list all debts, but it did mention that the creditor, in this case Chase Bank, will know anyways and if they let me keep it, they will likely charge high %. So, it probably isn't worth the risk of getting the whole thing dismissed and having to wait 6 months to file again.

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