After filing, when can you start using a credit card?

[angles]

OK, I know what you are thinking but here is the background. We have had this one CC for the last 20 years, always paid it off every month and can continue to do so. We zeroed it out before filing in order to chance that we could keep it after filing. The reason we want to keep it and use it is so that we have a level of protection that an ATM card does not offer (not to mention the cash back at the end of the year).

So when can we start using it again? Also, does anyone know when to expect a CC to make a decision on if they decide not to cancel you or not?

[BobMango]

Well if you're a Chapter 7 there is no legal requirement to stop using credit. It may not be wise to continue to use credit for a variety of reasons, particularly if you have a creditor that is likely to fight your filing. You could risk having the case dismissed for abuse (totality of circumstances.) The odds are that if you have a card survive and only charge small amounts like gas and pay it off you won't have an issue, but it is a risk. Most credit issuers will close the account when they receive notice that you have filed. If they are not listed in your matrix it may take a few weeks before they notice, but they will see the public record.

I had several credit cards, all with zero balance, and most with long positive history. None of them survived the bankruptcy.

I did apply for the HSBC card before discharge and was approved. Did not use it before the case was closed however.

[starr4law]

Curious to know how much it cost you to zero it out prior to filing - did it exceed the preferential transfer amount? If so, you have bigger problems then using a credit card while your case is pending.

In any event, I cannot think of a single reason that a debtor would need to use a credit card during their bankruptcy proceeding. Not one that would be worth the risk of a dismissal for fraud, anyways.

Just my two cents.

[nomoneynomore]

These were the same thoughts I had when I read your post. I'd ask my lawyer asap to make sure you don't get in deep water.

Curious to know how much it cost you to zero it out prior to filing - did it exceed the preferential transfer amount? If so, you have bigger problems then using a credit card while your case is pending.

In any event, I cannot think of a single reason that a debtor would need to use a credit card during their bankruptcy proceeding. Not one that would be worth the risk of a dismissal for fraud, anyways.

Just my two cents.

[frogger]

Also, does anyone know when to expect a CC to make a decision on if they decide not to cancel you or not?

They're going to close it.

[backtoschool]

The OP's question will most likely be a moot point. I agree with frogger. As soon as the credit card company does a monthly or quarterly account review they will close the account. Very few accounts survive the filing of chapter seven, and the ones that do are usually store cards that do not do regular account reviews.

[angles]

It looks like they are going to close it. We received an email over the weekend that our on line account is closed and we will only receive information through paper, or something like that. Not sure what it means but sounds like they have canceled us. Its nothing we really did not expect and not that big of a deal, but thought it would be nice if it did survive.

[BCA2009]

The OP's question will most likely be a moot point. I agree with frogger. As soon as the credit card company does a monthly or quarterly account review they will close the account. Very few accounts survive the filing of chapter seven, and the ones that do are usually store cards that do not do regular account reviews.

I had one visa survive the BK, at least so far. It's been seven months since filing. It has a 5K limit. I hadn't used the card in over 3 years and actually forgot I had it. They sent me a new card becuase the old one expired. I have used it twice (only when I cash in hand and put the cash in savings). Then paid it off as soon as the bill came in.

I have no idea why they didn't cancel or reduce limit. Definitely seems like the exception rather than the rule.

[ColoradoBell]

I kinda get steamed when I think of credit card companies canceling cards just because a person filed for BK. There are people, and I am one of them, who have no credit card debt....I filed because my X had piled up a lot of debt against my house and it was the only way to save it...but I owed nothing to any cc, bank, mortgage or car lender...nada, zip.

On the same day I filed, Chase cancelled 3 cc's with them, one of which had just been charged a $60.00 annual fee....I'm writing to tell them that if they cancel me for no reason other than my declaring BK, that I want the money back. Also, my disney rewards!

Hope you get to keep your card OP!

[mrskal]

I kinda get steamed when I think of credit card companies canceling cards just because a person filed for BK. There are people, and I am one of them, who have no credit card debt....I filed because my X had piled up a lot of debt against my house and it was the only way to save it...but I owed nothing to any cc, bank, mortgage or car lender...nada, zip.

On the same day I filed, Chase cancelled 3 cc's with them, one of which had just been charged a $60.00 annual fee....I'm writing to tell them that if they cancel me for no reason other than my declaring BK, that I want the money back. Also, my disney rewards!

Hope you get to keep your card OP!

Have to agree with you on this one! That sucks, did you try contacting them at all? Probably would not help, just curious.

[eastbaybk]

While the BK is pending the last thing you want to do is any major financial transaction. As far as using a credit card that had a zero balance before you filed I wouldn't use it simply because you don't want the Trustee to ask (which they do sometimes at the 341) when was the last time you used a credit card and then you have to disclose the facts that you have this one credit card that had a zero balance and yada-yada-yada. The less flags you raise the better. Better strategy is to just wait until after Discharge and if the bank hasn't closed the account (they periodically check your credit report) then use it then. Also, I hope you didn't pay them (within the 3 months before you filed) more than $600, otherwise it is a preference and a flag you'll have to disclose.

[gmk]

To support what eastbaybk said, the panel trustee at our 341 did ask us if we had used our CCs in the past 90 days.