Legal Question in Bankruptcy in New York

Using a secured credit card with plans to soon file Chapter 7 bankruptcy

I am probably going to need to file for Chapter 7 bankruptcy. In the meanwhile, I'd like to get a secure credit card so that I can have a means to pay for certain items online and at times when cash is not possible. Also could use it for car rentals which require a card of some sort. How will bankruptcy affect this card and the amount I've deposited with the issuing bank? Also, as I do have judgements against me, can the creditors garnish or freeze the money, be it $300 or even $1000, that I deposit with a secured credit card bank?

Thanks...


Asked on 2/03/04, 10:05 pm

2 Answers from Attorneys
Eric Kochel The Law Office of Eric David Kochel, Esq., P.C.

Re: Using a secured credit card with plans to soon file Chapter 7 bankruptcy

If you have a credit card, secured or otherwise, which has a debt on it, that is any amount owed - this would have to be listed as a debt on your Chapter 7 Petition and discharged. If nothing is owed on a card then you don't need to list it on the Petitiion because there is no debt. As for the amount deposited - this would be also listed and there is a limit as to how much you may have in all bank accounts. In New York, this limit is $2,500 - that is the total you are allowed in all bank accounts or deposit accounts of any kind taken together. You may also re-affirm a debt - that is promise to pay a credit card back and not discharge it if you want to keep that card. This is not recommended, however. Also, as for judgments - yes any creditor with a judgment may garnish your wages or put a lien on any deposit account - but only before filing bankruptcy. After all. this is one of the main reasons you want to file bankruptcy - to discharge and nullify unsecured debts, judgments and liens. After you file no listed creditor can pursue any judgment and any lien in effect could be lifted. If you need an attorney to help you, call my office at (212) 745-1373

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Answered on 2/04/04, 11:02 am
Andrew Nitzberg Andrew Nitzberg & Associates

Re: Using a secured credit card with plans to soon file Chapter 7 bankruptcy

I would like to disagree with the previous lawyer.

You must list all debts that you wish to have discharged. If you do not list the credit card, then the penalty is that that debt will not be a part of your CH7. There is no other penalty or problem here.

In addition, you may merely make sure that the balance on the card is zero on the day that you file. That is another alternative.

By the way, don't worry about credit cards. You will receive many offers after your CH7 is discharged. It makes no sense to me, but that is my experience.

You are welcome to a consultation at no fee at my offices at 42 West 44th Street (near Times Square). Please call for an appointment first (646) 591-5786.

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Answered on 2/06/04, 3:13 pm


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