Trying to Keep a Credit Card While Filing Bankruptcy


A large number of Americans are now filing bankruptcy because of overextending themselves on their credit. Over the last 20 years society has placed a high priority on having credit cards. The idea behind you can have it now and pay for it later has some flaws. This is why so many good people are having to file for bankruptcy as a way out of unsustainable debt. In today's economy there are many reasons for why people are filing for bankruptcy. The typical reasons for filing bankruptcy in the past were unemployment, divorce and an illness that ran up some huge medical bills.

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Although these reasons are still true for many people in the last 10 years people have been caught off guard living beyond their means and overextending themselves on credit. Just about everyone got caught up in just about unlimited credit limits as the banks pushed all this free money into the economy. Everyone thought that if someone would give them that much credit, they should be able to afford it. This was also true with the housing market where people were buying million-dollar homes on a stated income.

After the market fell and the dust cleared there were many stories of people with an income of $50,000 a year buying a home from $500,000 to a $1 million. They were enticed with negative amortization loans where the interest was piling up on the backend of the principle so they can afford to live there. For some crazy reason they thought the market would keep on roaring and if they got in trouble, they would just flip it, get their cash and run. By now, everyone in America has been affected in some way by this irresponsibility of the banks and Americans alike.

Now it's time to pay the piper as many people caught up in the craziness are now filing bankruptcy. What's even crazier is many of these people came into see the bankruptcy attorney with the idea that they want to keep a credit card account open to continue to charge on it. This usually does not set well with the bankruptcy attorney. Isn't the credit cards what got the individual into this financial trouble? Some people think that it's impossible to live without credit cards. The credit industry wants Americans to believe this even though it is not true.

The last time I checked, cash is still accepted at every store. Some individuals filing bankruptcy go as far trying to hide a credit card from the bankruptcy attorney, thinking that since it doesn't have a balance on it, no one will find out. Credit card companies run credit reports on their clients regularly and when someone files for bankruptcy that giant scarlet B will show up on the credit report and the creditor will close the account immediately. The reason a person can't keep a credit card account open during a bankruptcy filing is because this type of account is a two-way contract.

Unlike a secured loan, like a mortgage or car loan, that a person can reaffirm the debt in bankruptcy, a credit card account is a financial accommodation where the issuer agrees to extend credit and the person agrees to pay it back. With a secured loan, it's a one-way contract because the lender loans the money one time and the person pays it back over time with the property being the security for the loan.

So when comes down to it, you can try and keep a credit card when filing bankruptcy but it won't work. If the bankruptcy court finds out that you didn't list all of your creditors, there is a chance that they will dismiss the bankruptcy and you will be back to ground zero.


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