by Adam Mack, J.D.
Hillary Stirling, research assistant
THE SCENARIO
Sometimes my clients will ask about omitting or “saving” a credit card from bankruptcy so that they can continue to use it in the future.
WHAT COULD GO WRONG
This is a bad idea for several reasons. It opens you up to the accusation of perjury, you might have contractual problems with your credit card company if you file without giving them notice, and it defeats the purpose of bankruptcywhich is to give you a fresh start.
When you file your bankruptcy schedules, you declare under oath that you have completed them fully and, to the best of your knowledge, they are complete. If you knowingly omit a creditor of any kind, then you’ve lied to the court, and the court does not take that lightly. Most likely, a simple credit report will let the court know you’ve lied (or in legal terms, committed perjury). At best, the court might find that you’ve shown an indifference to the truth and toss out your case. If you’re found guilty of perjury, though, you could face hefty fines (up to $250,000) and even jail time.
Additionally, it’s common practice for credit card companies to cancel a credit card for a person filing bankruptcy – whether you include that card in the schedules or not. Because bankruptcies are a matter of public record, it would not be difficult for a credit card company to find out if you file. In such a scenario, you’ll likely have your card cancelled anyway while still owing the balance due.
That brings us to the third reason deliberately omitting a credit card is a bad idea: it defeats the purpose of going through the effort of filing bankruptcy in the first place. If you’re considering bankruptcy, you need a fresh start and to get out from under the debt you’re carrying. Why settle for anything less than the cleanest slate possible?
THE MOST IMPORTANT PART
Deliberately omitting a creditor of any kind is a bad idea all the way around. Please, talk to a qualified Kansas bankruptcy attorney if you still need guidance on this issue!
Disclaimer
These articles are for general informational use and do not constitute legal advice. Since laws change over time, it’s possible some articles are out of date and for that reason, we make no representation that the articles are fully accurate. For actual, up-to-date legal advice (including a free consultation), please contact us!
