Are Credit Cards With Zero Balances Listed on Bankruptcy Filings?

Bankruptcy is a legal proceeding that goes through the U.S. Bankruptcy Court.

Deciding to file bankruptcy can be a frightening experience. You'll soon be out from under a pile of debt, which will be a relief, but you may be wondering how to get started with the lengthy bankruptcy process. Many potential filers don't know what sort of information to list and what to withhold, particularly in cases like credit cards with zero balances. Make sure you know what to include by learning about bankruptcy as a whole.

Bankruptcy

Bankruptcy allows a debtor to regain control of his finances. The bankruptcy process does not allow you to decide which debts you will include in the bankruptcy and which ones you will withhold; all debts must be included on all forms of bankruptcy. This does not mean you cannot reaffirm a debt or continue to pay a debt, such as a vehicle loan. The vehicle loan must be listed on the bankruptcy petition, but there is a process where you can keep the vehicle and continue to pay the debt.

Bankruptcy Petition

The bankruptcy petition is the first step to initiating a bankruptcy case. The petition must be filled out completely and honestly. The petition asks for your personal information, including your income, debt, living expenses and assets. The bankruptcy petition is then filed with the local bankruptcy court, and the process begins.

Listing Debt

All of your debt must be listed on the bankruptcy petition. This debt includes rent, mortgage, credit cards, personal loans, installment loans, oral agreements and any other money you owe. You must include the balance owed, monthly payment, the creditor and the account number.

Zero Balances

Credit cards with zero balances do not have to be listed on the bankruptcy petition because you do not owe money. Bankruptcy is a legal process to reduce or eliminate unpaid debt -- if the balance is zero, there isn't any debt to list. You must be careful not to pay off a credit card shortly before bankruptcy, or this can be seen as fraudulent behavior. The bankruptcy process does not allow you to show preference to one creditor in the months prior to bankruptcy, and the petition asks for any large payments made within the previous six months to one creditor. A credit card with a zero balance should be paid off for a minimum of six months before filing for bankruptcy.

References

• DGW Law: FAQ Bankrutpcy
• Bankrate: Credit Card During Bankruptcy
• U.S. Courts: Bankruptcy