When you file bankruptcy, all of your credit card accounts will close. Even if you are current on your payments, have a zero balance at the time you file, or if you have had the card for thirty years ALL of our credit card accounts will close.
I am sometimes asked how the credit card company will know that you filed bankruptcy if you don’t owe them any money at the time your case is filed. Technology is a crazy thing! There are software systems that supply batch reporting of every bankruptcy case filed across the county on a daily basis to all of the major credit card companies. The credit card company then does an automatic “scrub” matching all of the social security numbers of bankruptcy filers against the social security numbers of account holders in their database to close any open accounts. This is usually done without any human involvement so it doesn’t matter how long you have had the account or that it is in good standing, it will still be closed.
If you have a Debit card attached to your checking account that contains a Visa or Mastercard symbol, this type of account will not typically be closed automatically upon filing bankruptcy. However, beware if this checking account with the debit card is held at a bank or credit union where you owe money (e.g. a car loan, line of credit or credit card). Credit Unions are particularly difficult when it comes to this issue as they will usually “suspend member privileges” when a member causes them to take a loss. This means that they may cancel your ability to use a debit card, ATM, or even write checks. The easy way around this issue is to simply open a checking account that offers a FREE debit card at a bank that you do not owe any money to before you file your bankruptcy case.
HOT TIP: If you have a credit card that offers rewards (e.g. dining, air miles, rebates) be sure to redeem what you can before you file bankruptcy because you may lose your right to redeem once your account is closed.
If you are married and your spouse is not filing bankruptcy too, they can continue to hold any credit card account that is in their name alone.