Do I Have To List a Credit Card With a Zero Balance?

People file bankruptcy for a variety of reasons. Often a bankruptcy is necessary to discharge a large financial obligation from a single catastrophic event, like a foreclosure or a large medical bill. Contrary to what some bankers and the media believe, many bankruptcy debtors have little or no credit card debt.

Some debtors have a credit card with no balance on the day the bankruptcy is filed. The Bankruptcy Code does not require you to report a zero balance credit card. If you don’t owe the credit card company on the date you file the bankruptcy case, it is not a creditor for bankruptcy purposes. If you do not list the credit card company in your bankruptcy schedules, the court will not send it a notice of your filing.

Having an open credit account can be useful to reestablish a positive credit history after your Chapter 7 bankruptcy discharge. However, your bankruptcy is a matter of public record, and most large banks and finance companies routinely compare new bankruptcy filings to their own records. Even though you may not have a balance, the credit card company may cancel the card when they discover your bankruptcy filing.

There are a few dangers that are associated with trying to keep a credit card account after bankruptcy. One danger is that the bankruptcy trustee may be able to demand that the card company turn over any large transfer of money used to pay off the account during a time when you were insolvent. Additionally, Chapter 13 debtors are prohibited from using credit cards during bankruptcy. Finally, intentionally failing to disclose a debt in your bankruptcy could land you in serious trouble with the court. If you have a credit card balance, you must report it as a debt.

If you have a credit card with a zero balance (or a very small balance) and you want to keep the card open, discuss your intention with your bankruptcy attorney. Your attorney will weigh the pros and cons of keeping the account open, and the direct you in the proper way to avoid trouble with the bankruptcy court.