When you file for bankruptcy, you must list all your outstanding debts on the bankruptcy petition as well as your assets. Debts include secured accounts such as home mortgages and car loans and unsecured debts such as credit cards, department store accounts, medical and dental bills, cell phone and other bills.
You cannot select which debts will be discharged under bankruptcy. The decision to keep your accounts open or to close them is up to your creditor. Your bankruptcy attorney has no authority to make these kinds of decisions either. Your bankruptcy attorney can negotiate with your creditors to try to get them to keep your account open if our can show that you are able to make the payments on time, but there is no guarantee that they will agree to do so. Also, keeping accounts open may depend on what type of bankruptcy you file.
Under Chapter 7, your unsecured credit card debts are generally discharged. Secured debt such as a home mortgage or debt secured by other collateral may be kept if your creditor agrees. Under Chapter 11, your debt is restructured. Any remaining unsecured debt is generally discharged after you complete your court-approved reorganization plan over a 3-5 year period.
Reasons Why you May Want to Keep Your Credit Card or Other Account
There are reasons why you may want to keep an account open such as the need for a credit card to travel or for an emergency. You may want to keep your department store charge open or other account if you have maintained a good credit history with a particular creditor. There may be a joint account or co-signer involved (learn more about what does it mean).
If you have a car loan or a home mortgage, you probably are going to want to keep your car and home if you can afford the payments. It is possible for you and your Indiana bankruptcy to negotiate a resolution to the debt so you may be able to keep both accounts. However, if at any time you default on your payment, the creditor can attempt to collect the debt against you after the bankruptcy discharge. This means that your lender could start foreclosure proceedings against you to foreclose on your home or your car finance company could repossess your vehicle.
Walton Legal Services: Indiana Bankruptcy Attorneys
A good Indiana bankruptcy attorney can explain how you can resolve your credit card debt issues and help you apply for debt relief order or assist you with bankruptcy filing. The attorney can answer any questions you may have regarding the bankruptcy proceedings and which debts you may be able to retain. Keep in mind that after your bankruptcy is discharged, you may be able to re-establish your credit by obtaining a secured credit card or getting a co-signer. Also, your credit will improve over time.
For questions about bankruptcy filing and listing your credit card and other debts, it is recommended that you speak with an Indian bankruptcy attorney.