Can You Keep Your Credit Cards When You Declare Bankruptcy?


When you declare bankruptcy you are expected to turn in a list of all your debt – credit cards, medical bills, mortgage, everything. But what happens if you want to hang on to a credit card and use it after you declare bankruptcy? Is it legal?

Technically you can hang onto a credit card or two when you file bankruptcy, but you have to handle it carefully.

The correct way to keep a credit card through bankruptcy:

  • 6 to 12 months before you plan to declare bankruptcy, you have to pay the balance off on the card. Zero balance – no money owed.
  • You will have to keep the card at zero balance throughout your bankruptcy proceedings. Keep a zero balance on your credit card until your bankruptcy is discharged.
  • When you make up the list of everything you owe, do not list the card. Bankruptcy gets rid of your debt, and you will not have any debt on that card.

Now, the main reason for keeping a credit card active is simple. You will not be able to get anything but a secured card (or a card with $250 in up front fees) right after you declare bankruptcy. Being able to keep a card with a decent interest rate through your bankruptcy will help you repair your credit that much faster.

The risks:

  • If you pay down that credit card less than 6 months in advance it could cause your other creditors to challenge the legitimacy of your bankruptcy. After all, you had they money to pay down that debt, why couldn’t you pay theirs? That could actually cause your bankruptcy to fall through. If that happens you will be out the money for your lawyer, and still owe on all the debt you were trying to wipe out.
  • Even if you don’t list the credit card when you declare bankruptcy, the bank that issued your card could still cancel it when your bankruptcy goes through. If that happens, you have wasted the money you used to pay down the debt you had on that credit card.

If you can’t pay down your credit card balance at least six months prior to your bankruptcy, there is still one way you might be able to keep your credit account.

You can do what is called “re-affirming the debt.” This basically means that you call your credit card company, explain that you are filing bankruptcy, and that you would like to keep your card. It’s sketchy territory.

Your lender will want you to keep the debt and pay them back, but you are going to have to convince them that you really can do it. Otherwise they will close out your account. If that happens you will be stuck with the debt after your bankruptcy, and you still won’t have an open credit account.

Is there a better option?

There might be. Look at it this way: If you owe $12,000 on a card – even if it has an excellent interest rate, you are going to run into a lot of problems trying to keep it open throughout the bankruptcy proceedings. Financially, it makes more sense to include the card in your bankruptcy. Take the $1200 (or $600 or $300) you would have used to pay down that card and put it into a secured card after your bankruptcy is discharged.

Cards like the Orchard Bank Secured Credit Card have very low interest rates, are easy to get, and you even earn a tiny rate of interest on the money in your savings account. This acts as a failsafe too. If something bad happened and you got behind on that card after bankruptcy, then at least you know the savings account will cover your balance in the event of a default.

Have a question for us? Leave a comment below!

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12 Responses to “Can You Keep Your Credit Cards When You Declare Bankruptcy?”

  1. Michael Says:

    In regards to the article about keeping a credit card if you file bankruptcy, it all depends if you file a chapter 7 or chapter 13. If you file a chapter 7 your advice may be possible, but if you file a chapter 13, it won’t be possible to keep any of your cards even if they have a zero balance.

    The reason I know this as a fact is that I had filed a chapter 13 and had 3 cards with zero balances on them and after I filed, the accounts were closed by the credit grantor. The bankruptcy attorney pulls your credit report information and all your creditors whether owed or paid off is included in your filing petition.

    You also have to go through a mandatory credit counseling class that you can do online and it pulls all your creditors up when you take the class. Thus, you will lose your zero balance cards anyway.


  2. Jenna Says:

    Thanks for your input Michael! It’s valuable to us.

  3. Grant Says:

    Even if you are able to avoid not having your card closed through the court, your FICO score will drop significantly when the bureau receives communication of your bankruptcy. Also, all card issuers receive the list of individuals filing bankruptcy each week. The likelihood of receiving an adverse action (card closed, balance chased to zero, or large credit line decrease) is very high especially in the current environment. If you are somehow able to keep one of your existing cards in working order just count yourself lucky, but otherwise be prepared to try to reestablish your credit through one of the means discussed on this website (secured credit card).

  4. Jenna Says:

    Thanks for your comment Grant!

  5. Jean Bellego Says:


    I thank you in advance for your kind advice. I am seriously considering declaring bankrupcy. A friend recently told me that American Express Card debt cannot be listed when declaring bankrupcy just as federal school loans. Is that correct?
    Thank you and have a nice weekend.

    Jean Bellego

  6. Amber Says:


    What is significant to whether debt can be listed or not is what type of debt it is: secured, unsecured, purchase money secured interest, student loans, payday loan, overdue taxes, criminal fines, mortgage, etc., but NOT what company issued the credit: there is no difference between Amex, Visa, Discover or any other credit card company.

    There MIGHT be a problem with the Amex depending on 1) what it was used for, 2) how recently, and 3) if you are trying to protect co-debtors who are not filing with you, but there is no blanket non-dischargablity rule like there is with the student loans.

  7. Rae Says:

    I have charged quite a bit in the last month, thinking I was gonna get a large sum of money. Now I find out it’s only a few thousand, and to top it off, my husband has left me. I am thinking about filing ch.13 now because there is no way I can pay for everything. But I’m a scared they will think I went on a shopping spree knowing this. What do you suggest?

  8. Sunshine Says:

    My husband and I have started bankruptcy procedures this week, yet not sure yet if we qualify for chp.7 or 13. We were told to make a list of the cards we would like to keep. I have a medical credit card which balance is 2K also a credit card with 1k balance, we have never been late on either card. Can I keep both cards & continue making monthly payments? If so will this help me re-establish our credit or will the credit card company still close the account?

  9. Kurt Hagadakis Says:

    I have an exactly reversed experience. I DIDN’T want to keep any credit cards. So, I closed all the accounts at the same time I filed a Chapter 7. Should be the end, right?

    Oh, no. Capitol One smelled a scam they could run. They refused to close the account immediately, claiming “somthing might not have cleared”. No prob. I cut the card up. A month later, when it was supposed to close, I checked, and they had assessed a late fee, and were saying that was “activity”. I put my request in writing (for the second time) and sent it to their address for legal service (certified). A month later I finalized my bankruptcy. 2 weeks later, I get a letter from EXPERIAN!?! warning me that I should pay the Capitol One fees, incurred from the date of my filing, “to preserve my credit”. I submitted the certified letter to them, explaining that the account was closed. They refuse to regard it so, accepting any claims made by Capitol One.

    I am currently researching their relationship. My post counseling session mentioned that it is a felony to masquerade as a consumer reporting service to collect a debt. Taken all together, this is about as clear a fraud as can be imagined.

    Oh, I acted as my own attorney. Caused no issues in the Chapter 7 (and it all cost only $55), but I think that’s one of the reasons Capitol One are trying this.

  10. LILLIAN R Says:


  11. Reanna Dawson Says:

    I am just filing bankrupcy because i have a judgement on me for over 25,000 from a car accident in they suspended my licence. i have around 8 credit cards that i have no balance on i was wondering since i dont owe anything on them would i be able to keep them as long as i dont use them while iam filing? T

  12. Christine Says:

    I kept a cc thru my ch 7 (recently filed by atty) which has a low $120 balance on a $2500 limit. The card hasn’t been cancelled and I had a high credit score for years until now which the card may still have on record.

    Can I use the cc now for gas or food since I’m broke….. If I spend very little.

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