Does it matter if we have any active cards

[yomama]

I was reading the Bankruptcy FAQ, specifically the thread "What are the key steps in the process of bankruptcy?" It lists sample questions that the trustee assigned to our case might ask us. One of them is, "Have you destroyed your credit cards?" I'm not sure how to answer that one. Does it mean just the ones that we are wanting to be discharged or does it mean all credit cards including ones we don't owe on? We are including six credit cards in the bankruptcy but still have one that we keep for emergencies. We have destroyed all credit cards except for that one. Should we destroy it too? I didn't know if the court would look at us having that one is being unfavorable. If one of our appliances would break down, that would be the only way that we'd be able to buy a new one. If we have to, though, we will also destroy that one if the court requires it and/or that would be a plus on our side. Does it matter or not?

[SinkingFast]

I'd read that too, Yomama. About cutting up credit cards. And someone posted here that they were actually asked that question by the Trustee. They had cut up their CC's.

We had a "Cut up the CC's" day back in the spring. But we also have Credit lines that had Zero balances which we did not include in BK. 2 are Store Cards. And one is a regular CC that must have gotten cut up in the "Whack the CC's" day.

Our Trustee never asked about our CC's. He was on a "Did you read the Trustee's Statement" kick. Which our attny informed us about before we ever went into the meeting.

I'll be interested to see if we can use either one of the store cards since we filed BK. It's not uncommon for Creditors to cancel your LOC once they learn you've filed BK.

[lrprn]

We are including six credit cards in the bankruptcy but still have one that we keep for emergencies. We have destroyed all credit cards except for that one. Should we destroy it too? I didn't know if the court would look at us having that one is being unfavorable. If one of our appliances would break down, that would be the only way that we'd be able to buy a new one. If we have to, though, we will also destroy that one if the court requires it and/or that would be a plus on our side. Does it matter or not?

I hate to be the bearer of bad news, yomama, but even though you now have one credit card with a $0 balance that you aren't including in your bk, once the cc company finds out you've filed, they are very likely to cancel it.

The major credit cards share information about their cardholders through a common database - that's how they all know to jack up APRs if you're late on one card payment. Because of this shared information, it's very likely this credit card company will find out you've filed and cancel your card, even with a $0 balance. Occasionally some members have posted they've been lucky enough to have one credit card slip through without being canceled, but it's not the norm. Please don't count on this card to be your financial savior during Ch 13 - you are very likely to lose it. Also, during Ch 13 you aren't allowed to take on any new debt (such as charges on a credit card if it does manage to survive) without the trustee's permission - quite a catch-22, isn't it? So sorry!

[HHM]

It's not a common question...actually, it is a rather pointless question...the trustee is more "sermonizing" when they ask it because even if you answered no, there is nothing they can really do about it. Destroying your credit cards is not a prerequisite to receiving a discharge in BK.

Also, lrprn is correct, if the credit card is from a major bank, odds are, they are going to find out about your BK, but it will be 50/50 as to whether they will cancel it or not. My money is on the fact that they will not cancel (because they did not lose any money with you), but they will likely increase your interest rate or perhaps tac on an annual fee. Also note, you cannot use credit while your BK is pending (i.e. before discharge). Once your discharged, you are free to get and use credit.

You didn't really post anything about your circumstances, but I do want to address the mind-set about "needing" a credit card for emergencies. The main problem is that people go through a bankruptcy, but maybe 1 in 4 actually change their habits and mind set about credit. Moreover, psychologically, what counts as an "emergency" will be open for interpretation when something comes up. You mentioned an appliance breakdown, (ok, fine, but people used to hand wash dishes for centuries), or if your cars A/C compressor leaks...but wait, we are going into winter, do you really need the AC compressor fixed NOW? Of course, there are real emergencies, but as a habit, people lose site of that when they have such easy access to money via a credit card, thus, mere inconveniences become emergencies. Instead of having to rely on a credit card, start putting a little bit of money aside from every paycheck. On this board, I am a big proponent of budgeting and proper financial management. You should approach so called financial emergencies as if you had no credit...what would you do? Could you go without...where would you cut your expenses to save up, perhaps a second job for a few weeks, perhaps ask your family for help, buy the item second hand instead of new.

The problem is, most people go about saving by putting it aside AFTER they have paid their expenses...that doesn't really work for most people because it puts saving as the lowest priority (meaning, you will forgo doing it if something else comes up). You need to put money aside BEFORE you pay any expenses, you put that little bit of savings as the top priority in your budget. Even if its just 10$ per week, put that money in a savings account or money market account.

So the paradigm becomes
Savings $10
Rent $800
Groceries $200
Whatever.

Pretty soon, you will have enough money to buy a new dishwasher if the one you have breaks.

Anyway, the point is, you should try to look to alternatives to using credit.

[SinkingFast]

The problem is, most people go about saving by putting it aside AFTER they have paid their expenses...that doesn't really work for most people because it puts saving as the lowest priority (meaning, you will forgo doing it if something else comes up). You need to put money aside BEFORE you pay any expenses, you put that little bit of savings as the top priority in your budget. Even if its just 10$ per week, put that money in a savings account or money market account.

So the paradigm becomes
Savings $10
Rent $800
Groceries $200
Whatever.

Pretty soon, you will have enough money to buy a new dishwasher if the one you have breaks.

Anyway, the point is, you should try to look to alternatives to using credit.

We did our Post BK Debtor Education with CCCS of Atlanta.

This was one of their points.

In setting up your budget, pay yourself first before you pay a bill. ie SAVE!

If you don't pay yourself, no one else is going to.

Ideally, CCCS recommended saving 10% of your Net. But if you can't do that, save something. Anything is better than nothing.

Don't put Savings as the last item on your expenses list. Make it the first item on your monthly expenses list.

We've been CC free for nearly a year now.

We've had real emergencies come up. Water pump went out. Death in the family. That's a "you have to go now" it can't wait situation.

Car needed tires. We put that off for several months until we could afford to take care of it. In the mean time we researched and priced tires so we'd be prepared for how much it would cost going in.

If something comes up and we don't have the money, we don't have the money.

I remember living like this. It's been years, but we did used to live this way!

[CindyLou]

Here I am again <smile> standing by my opinion that everyone should have a credit card for emergencies. I do agree with you, however that the definition of "emergency" is one that should be reckoned with. As someone who lives 2500 miles away from my loved ones; its not always about having the money or not having the money. Ever try to get a last minute flight to see a dying family member without a credit card? How about rent a car without one??? Ok, so made my point. (HHM, I know you still don't agree, and thats ok <smile again>) Now back to the thread. Yommama, first of all, you should answer those types of crazy questions the way they want them to be answered. (unless of course you would be completely lying). But if they leave them up for interpretation, DO NOT ASK THEM TO INTERPRET. Interpret for yourself and answer how it best suits you. If they are unclear they can ask more questions and you can explain why you answered the way you did, i.e,. "oh, i assumed you were asking about the one that were included." The quetions are pointless and non-specific. If they ask something like did you cut up your cards and you say yes then you are interpreting that they meant the ones included in BK. Don't read too much into those things. I wasn't asked that, by the way. As far as your zero balance credit card. Which company is it with? I had one with CB&T and they kept it open. I had called them prior to filing to see what their policy is. You can call and ask the policy without giving your account info. If its Amex or Discover FORGETABOUTIT!

[HHM]

Just to clarify...

I am not saying "don't have a credit card", I am saying, "don't rely on the credit card". Whether you should or should not have a credit card is something the person needs to address themselves by asking, how likely are they to resist the temptation to use it, will mere inconveniences become emergencies, will you pick up that $12 shirt at Wal Mart on sale when your only their to buy bulk toiletries.

I am not "anti credit" per se...it's just that our society does not educate people about money and how to use it...so people get themselves into to trouble. The credit card debt load of the average American adult is about $9,000. So I try to preach alternatives because temptation to use credit is very great because its to easy to use, and toooooo easy to rationalize.

[yomama]

Due to time constraints today, I'll just have to say thanks to all of you for replying. It is much appreciated!