One of our readers, Luis, had this question:

So in the wake of the Circuity City business faltering… in other words, going under… Can I get away with not paying of their credit card?

Luis,

When a company files for bankruptcy, it’s a little different than when a person files for bankruptcy. Usually a corporate bankruptcy is more of a “restructuring” plan that involves staying open, making some cuts, and working out an extended period of time to get their finances in order and repay many of their debts.

To that end, Circuit City has closed over 150 of it’s stores, but kept many open. The credit card that you have is most likely financed by CHASE rather than Circuit City (since they have a partnership in order to offer credit to Circuit City’s customers). Check your terms and conditions to be sure.

Now, regardless, you will still have to make your credit card payments. If you do not, the credit card company will simply sell your account to one of the many vicious collection agencies, and it will ruin your credit score, etc.

Even if Circuit City ends up going under completely, you will still have to pay your credit card debt – you can bet that they will sell your credit card account if they need to in order to raise money. No breaks for consumers when a company goes under – especially where credit is concerned!

Another reader, Ralf, had this question:

My filing for bankruptcy will be filed soon. I heard that Wells Fargo is notorious for freezing accounts. Can they freeze my account even though I have no credit cards / loans or any credit with them associated with my bankruptcy? I only have a visa check card with them. More importantly, if they can freeze my funds, where should I get my paycheck deposited to avoid this mess.

Sincerely

Ralf

Hi Ralf, thanks for your question. I am not familiar with Wells Fargo’s bankruptcy policy. I did do some research into it, and I see what you mean about them freezing accounts from several consumer reports online.

You can either call them, explain the situation, and as them what to do, or you can go ahead and move your direct deposit to a different bank.

If you don’t have any credit lines with them, then there is a good chance that your bankruptcy won’t make a difference. Normal bank accounts are not usually included in a bankruptcy unless you own the bank money in one form or another.

Just to be on the safe side though, you could open up another checking account prior to your bankruptcy. If Wells Fargo gives you trouble, it will be a simple matter to have your direct deposit switched to the new account. If all goes well, you can simply close out the new checking account, or keep it as a backup. Just make sure you get one that doesn’t have monthly fees.

And one last question from Bonnie:

My boyfriend put me on three accounts as an authorized user. I used each one occasionally a few years ago but have not used any of them for the last few years since I established my own credit. I had no knowledge of his balance transfers, how much the balances were or his payment history. Now these three accounts are affecting my debt ratio and so my credit score. We are not married. Can he request that I be taken off his accounts? Can I request or should I demand to be taken off. He has closed the accounts in order to pay them off. What is my liability? Awaiting your reply.

Hi Bonnie,

As an authorized user you have no liability for the debt on those credit card accounts. However the amount he owes on them could certainly be lowering your credit score.

In this situation, te best thing to do is to give him a call and have him remove your name from the accounts. This is not normally something that you can do yourself since *technically* it’s not your account.

All he will have to do is give the credit card companies a call, and ask that your name be removed as an authorized user.

Once he does this, wait a month or two and then check your own credit reports to be sure that the accounts are no longer showing up each month.

Have a question for us? Leave a comment below!

Grab our free RSS feed and keep reading:

• Turned Down For A Student Loan
• Should I Declare Bankruptcy?
• Your Credit Card Company Could Unexpectedly Lower Your Limit

This entry was posted on Tuesday, January 20th, 2009 at 08:29 and is filed under Reader's FAQ. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.