Disclosing Credit Cards When Filing For Bankruptcy

Do I Have to Disclose My Credit Cards to My Trustee When Going Bankrupt?

Bankruptcy, a word that no one hopes to encounter in their personal or professional life, can be an overwhelming process. One of the most important aspects when filing for bankruptcy is disclosing credit cards. This guide aims to provide an in-depth understanding of the process, the importance of transparency, and the potential implications of failing to do so.

1. Understanding Bankruptcy

Bankruptcy is a legal proceeding in which individuals or businesses unable to pay their debts can seek relief from some or all of their debts.

 

2. The Role of Credit Cards in Bankruptcy

Credit cards are one of the most common forms of unsecured debt. When filing for bankruptcy, it is crucial to declare all active credit cards, even if they carry no balance. Also, any debt accumulated on credit cards immediately before filing for bankruptcy may be scrutinized.

 

3. The Process of Disclosing Credit Cards

When filing for bankruptcy, all credit cards, even those with zero balance, must be disclosed in the bankruptcy petition. This includes store cards, gas cards, and major credit cards like Visa, MasterCard, American Express, and Discover. It’s essential to be thorough in this process to avoid complications.

 

4. Implications of Non-Disclosure

Failure to disclose all credit cards when filing for bankruptcy can lead to serious consequences. It’s considered perjury, a federal crime, and can lead to dismissal of the bankruptcy case or even criminal prosecution.

 

5. Dealing with Joint Credit Cards

In the case of joint credit cards, both parties are responsible for the debt. If only one cardholder files for bankruptcy, the other will still be liable for the debt. Therefore, it is pertinent to disclose all joint credit cards when filing for bankruptcy.

 

6. Secured vs Unsecured Debts

Secured debts are those attached to an asset, such as a house or car. If the debtor fails to pay, the creditor can take the asset. Unsecured debts, like most credit card debts, are not tied to any specific asset.

 

7. The Role of Executors and Trustees

The executor or administrator of a bankruptcy estate must ensure that all legitimate bills and debts are paid out from the proceeds of the estate.

 

8. How Life Insurance Policies Factor In

Life insurance proceeds may be included in the bankruptcy estate, depending on the type of policy and the beneficiary. It’s important to understand how these policies work when disclosing credit cards and other debts in a bankruptcy filing.

 

9. Understanding Wills, Trusts, and Probate

Wills and Trusts are legal tools that specify how an individual’s property will be distributed after their death. Probate is a legal process that confirms the validity of a will and carries out its instructions.

 

10. Seeking Professional Help

Bankruptcy is a complex process. It’s recommended to seek professional help when filing for bankruptcy to ensure all credit cards and other debts are correctly disclosed, and the process is completed legally and efficiently.

In conclusion, disclosing credit cards when filing for bankruptcy is an essential part of the process. It’s crucial to be thorough and honest to avoid potential legal troubles down the line. Always seek professional advice if you’re unsure.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

Discuss options to get out of debt with a trained & licensed debt relief professional.