what happens with a zero balance credit card after BK?

[icantwin]

Hi all! new here with a question.

Over the years I have jockeyed my balances around my cards trying to save interest etc. Now I have ended up with most of my credit on just two cards and have one or two with zero balances. What will happen to these if I go through with filing chapter 7. Do banks with no loss have to leave them open or will they suddenly close them on their own to avoid risk? Also in the case of these creditors that I owe nothing to, do I have to include them on the matrix when I file the petition?

Thanks in advance for the help.

[SinkingFast]

Any Creditors that you owe nothing to do not have to be included in your Creditor's Matrix.

Whether or not the LOC's will survive the BK totally depends on the Creditor. Many Creditors have a "General Default" clause. If you're late on payments or file BK against any other Creditors, the CC's you owe nothing on may have the right to reduce your LOC's or even close your accts. You'll just have to wait and see what happens.

[Viper]

Also consider when your last balance transfer was before you file for BK. If it has been too recent the CC will most likely contest your BK.

-Viper

[SinkingFast]

Good point, Viper!

If your balance transfers happened within 90 days of filing for BK, and were in excess of $600 total, that could be considered Preferential Payments to Creditors. The Trustee could go after that money to distribute amongst Creditors who file a Proof of Claim.

[CanPayNoMore]

Also consider when your last balance transfer was before you file for BK. If it has been too recent the CC will most likely contest your BK.

-Viper

Has anyone had a creditor contest a balance transfer more than six months old at the time of filing Chapter 7? Example is transfered $8000 from Chase to AMEX Blue 08/2006, planning to file Chapter 7 end of March 2007.

Thanks

[BKOnce]

Before C13, I have Home Depot card with zero balance and never listed, during 3 years of C13, Home Depot never cancel my card, and I countinue to use many times until discharge.... well, right after case closed, I guess they knew & updated credit & canceled my account. Now, I applied again, they denied. Weird!.., shouldn't let me use first time then now closed for no reason!?

[Spartan]

One week after filing, I received an unsecured card ($300 LCO) offer. Needless to say, the terms are horrible. But it is the thought that counts, right?

[bige1030]

Hi all! new here with a question.

Over the years I have jockeyed my balances around my cards trying to save interest etc. Now I have ended up with most of my credit on just two cards and have one or two with zero balances. What will happen to these if I go through with filing chapter 7. Do banks with no loss have to leave them open or will they suddenly close them on their own to avoid risk? Also in the case of these creditors that I owe nothing to, do I have to include them on the matrix when I file the petition?

Thanks in advance for the help.

If you transfered at least $750 to one card (or in all to both cards if they're from the same bank) within the 70 days before filing, that transfer is presumed nondischargeable, and the creditor can object to you discharging that debt based on that presumption. This would apply to both cards if you transfered at least $750 to each card within the 70 days before filing.

It's hard to tell what would happen if you filed on day 71 (or shortly thereafter) or if the transfers were under $750. The creditor could ask to have those debts be declared nondischargeable if they can prove that you were "pulling a fast one." A general rule is: the longer ago this happened, the less likely they'll object.

As for your $0 balance cards, you shouldn't list them as debts or on the matrix since you're not in debt to those creditors. If the transfers were at least $600 and made within 90 days of filing, you'll have to report those as preferential payments to those creditors. You wouldn't have to worry about that if you filed on day 91, though.

Whether or not those creditors decide to close those $0 balance accounts is up to them. The agreement you made doesn't matter; they can pretty much change it any time they want to, for any reason. They do have to give you notice, though, and they have to offer you a chance to get a free copy of the credit report that they saw (due to adverse action) if they close those accounts.