The Pros And Cons Of Being Forced To Get Rid Of Credit Cards In Chapter 7
One thing you might not realize about Chapter 7 bankruptcy is that it requires that you list all open accounts you have, including credit cards with zero balances. You cannot simply not list a credit card in hopes that you will be able to keep it, and this is something that can be bothersome to some people. There are pros and cons with this, though, and you should fully understand this before filing.
The pros of losing all credit cards
The goal of Chapter 7 bankruptcy is to allow a person to become as debt-free as possible. There are certain debts that will not be wiped out when you file, but many will, including all credit card debts. In exchange for wiping out your debts, filing for Chapter 7 has consequences. One consequence is being forced to give up your credit cards.
Even if you do not list all your credit cards on your bankruptcy forms, your creditors will still know you filed. When they find this out, they will typically cancel your accounts. You will no longer have access to your existing cards, but this is not a bad thing.
Without credit cards, you will find it much harder to get back into debt. You will learn how to use cash to pay for the things you need, and you may be forced to cut back on your spending. As you begin learning to live like this, you may be able to develop strategies you can continue to use for the rest of your life. If you do this, you may be able to stay debt-free in the future.
The cons of losing all credit cards
The downside to losing all your credit cards is that you will not have a way to buy things if you do not have cash. This may create problems when you have emergency car repairs or other bills, but this lesson may teach and encourage you to start saving money. If you can save money, you could create an emergency fund for times like this.
The other downside to losing all your credit cards is that you lose the history you have with your credit card companies, and this means you will have to start over. Eventually, you will be able to get new credit cards; however, the credit lines might start off a lot lower than you are used to. This again, may not be such a bad thing though. If you can learn to live without charging things, you may be able to avoid financial problems in the future.
Chapter 7 has many pros and cons, and it is important to fully understand these before you file. If you have any other questions about bankruptcy, contact a bankruptcy lawyer today.