I Filed for Bankruptcy – Can I Still Use my Credit Card?

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Whether you’re filing for chapter 7 or chapter 13 bankruptcy in New Jersey, you may be wondering what is and isn’t allowed while your case is open. It’s a good idea to always check with your lawyer before making any financial decisions after you’ve filed for bankruptcy to ensure that you’re acting within your rights and within the bankruptcy court’s laws and guidelines.

Credit card debt is one of the top reasons people file for bankruptcy in this country. As a nation, we have become accustomed to material luxuries like big screen tvs, video game consoles, and the newest and fanciest cell phones. For many people, these items would be out of reach due to financial constraints. Unfortunately, credit cards step in where income falls short. Acquiring multiple credit cards has become commonplace in most US households.

At first, using a credit card to pay for a few things seems like no big deal. You tell yourself that you’ll pay it off as soon as you get your tax refund, or your new job, raise, etc. All too often, once it’s time to pay off the balance, something else requires your attention (and $$), leaving the credit card balance to accrue interest month after month after month.

Luckily, filing for bankruptcy is an option for people who have gotten carried away with credit card use. Bankruptcy is by no means a “free pass” on your poor decision making, though, and you must change your spending habits after your debts are discharged.

What about during my bankruptcy? Can I still use my credit card(s)?

Many people who file for bankruptcy in NJ are so far behind on their monthly bills that they want to continue to use their credit cards while waiting for their bankruptcy discharge.

As soon as you file your petition with the NJ bankruptcy court, all of your creditors (i.e. credit card companies) will be notified of your impending potential discharge. As soon as they are notified, your credit card accounts will be closed in order to prevent you from adding even to the balance only to have it “wiped clean” at the end of your bankruptcy proceeding.

How about a card I’ve never used before?

Sometimes, keeping a credit card around with a zero balance is a good idea. It’s only a good idea for people who have a firm grip on their finances and will only use that card for emergencies. If you’ve filed for bankruptcy and you remember that you have another credit card stashed in a filing cabinet somewhere, you may wonder if you can use it. After all, it has a zero balance!

The answer to that question is a resounding “NO,” for several reasons. First, you’re required to report all of your open credit card accounts when you file for bankruptcy, even one that has no balance. If you didn’t report it, you’ve essentially committed bankruptcy fraud and you need to amend your petition immediately.

In the event that you did report the account in question, the credit card company will have closed your account upon learning of your bankruptcy. Yes, they will close the account even if you had no balance on the card.

You are prohibited from acquiring new debt when you have an active bankruptcy case unless you get express written permission from the court or in a literal emergency. To find out what constitutes a true emergency in this situation, get in touch with your NJ bankruptcy attorney before charging anything to a credit card, even if you discover that your account has yet to be closed.

Image credit: Kaiyan

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