The effect of the bankruptcy of business is often one of the largest concerns of many business owners who realize they must file bankruptcy. One of the most frequent questions is whether they will be allowed to keep any of their credit cards once they file for bankruptcy. This is certainly a valid concern, particularly is the business owner plans to restructure the business and continue operating rather than liquidate the business under Chapter 7. Credit cards are an essential for renting cars, booking hotel rooms and for using in cases of financial emergencies. It is little wonder that so many people are concerned about whether or not they will be able to keep any of their credit cards once they file bankruptcy of business.

The answer to this question is highly individualized. In many cases, it is true that the petitioner may not be able to keep any credit cards once they have filed for bankruptcy. It really all depends upon the balances they have maintained on their credit cards. In the event that the business owner maintained a credit card for a significant period of time with a zero balance, then it is quite possible that they may be able to keep the credit card.
It should be kept in mind that if you recently pay down a credit card to zero in order to try to keep it throughout the bankruptcy, this may not be effective and produce the desired results. In fact, it can actually result in challenges to the bankruptcy filing. Therefore, it is best to avoid taking this type of action in an effort to hold onto a credit card.

In addition, it should be kept in mind that it is still possible that a zero balance credit card will be canceled. It really depends on the bank that issued the credit card. Some issuers are quite strict and will cancel the credit card regardless simply because the holder filed for bankruptcy. Other issuers are somewhat more understanding and will not cancel the credit card.

Regardless, it is important to make sure that you report all credit cards when filing your bankruptcy petition. Withholding any information, including zero balance credit cards, when you file for bankruptcy is unethical as well as illegal. If you withhold information on a creditor it could be said that you are give preference to one creditor over others and that is illegal. In the end it can result in significant negative consequences, including the inability to discharge other debts. Along the same lines, make sure you avoid the temptation of charging up a lot of debts in the weeks and months leading up to your bankruptcy petition with the plan to discharge it soon.

Your best option is to wait until your business bankruptcy filing has been completely cleared and then work with a consultant that specializes in debt management. As you maintain good credit following the discharge of your bankruptcy case you may find that you will eventually be able to qualify for credit once again.

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