With so many struggling to make ends meet, it’s no wonder that bankruptcies are on the rise. But what happens to your credit cards when you declare bankruptcy in Shreveport, Louisiana?
Can you keep any of your credit cards?
When you file for bankruptcy, you must report all your credit cards. Reporting includes cards that have a zero balance. So, the short answer is no. Eventually, credit cards will start to become available again. At first, offers of secured credit cards will start showing up in the mail and possibly emails. Those are the cards secured by your money. Not having credit cards can be a hassle, but there are benefits to bankruptcy that can be a trade-off.
What are the different types of bankruptcy?
There are different types of bankruptcy, each with its own consequences.
The most common type is Chapter 7 bankruptcy, which is the most destructive to your credit score. In Chapter 7, most assets, including your home, car, and other valuable items, will be liquidated with a few exceptions for property. With this type, you can reduce or erase all your debt, but it can also cause significant disruptions in your life.
Chapter 13 bankruptcy is a more lenient option. It’s a repayment plan that allows you to keep your assets while working to reduce your debts. You must still undergo a financial reorganization, but you can keep your home and car while continuing to make payments. This type is for those who need time to straighten their finances but don’t want to erase their debts.
Chapter 11 bankruptcy is the most common type used for businesses in America. It allows you to reorganize your debt while keeping some or all your assets and, with court permission, allows for borrowing new money. You must go through a financial reorganization, but this process usually doesn’t result in major disruptions in your life.
Bankruptcy as a fresh start
If you have no other options and can keep up with the minimum payments on your card(s), it might be a good idea to keep your credit score intact. However, suppose you’re struggling to make ends meet, or your bank account is currently empty.
In that case, it may be wise to declare bankruptcy to eliminate those delinquent debt accounts and start fresh with new credit score prospects. Although declaring bankruptcy may be the least desirable option for some, it could be the best step for you if other options are not available.
