Frequently debtors fail to list one or more creditors in their bankruptcy schedules. If the creditor was simply overlooked, the schedules may be amended to add the creditor at any time. However, where a creditor is deliberately omitted, may be cause for denial of discharge. Frequently debtors believe that by omitting the creditor from the bankruptcy and paying the balance will permit the debtor to retain the credit card. This is a fallacy.
The local agency for the major credit reporting agencies, e.g., Experian, Equifax, Transunion, periodically reviews bankruptcy filings, enters those in the local computer, which, in turn, “talks” to the national data base. The computers of credit card issuers routinely (usually monthly or quarterly) “inquire” at the credit reporting agencies regarding cardholder credit records. When the computer discovers a bankruptcy filing for a cardholder (matching name and social security number), in most cases the computer is programmed to automatically issue a standard form letter canceling the card and requesting its return.
A debtor with a credit card having a small balance or, for that matter, no balance is well advised to either (1) cut up the card and return it to the issuer or (2) contact the issuer immediately to determine if the issuer has a program whereby the card may be retained. Several credit card issuers have policies that permit a bankrupt card holder to retain the card at an appropriate credit limit notwithstanding the bankruptcy. If there is a small balance due, the debtor may reaffirm the debt, subject to approval by the bankruptcy judge. If there is a “0” balance, the issuer may simply reduce the credit limit and require the debtor to execute a new agreement. However, if the holder waits until the fact of the bankruptcy filing is discovered by the computer, seldom, if ever, will the issuer be agreeable to continuing the credit line.
For more information on bankruptcy, please visit http://www.abankruptcyfirm.com/ or contact your Kansas City Bankruptcy Lawyer, Betsy Lynch at 816.434.6616.