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Closing zero balance credit cards before filing.

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  • Closing zero balance credit cards before filing.

    I have researched this but cannot find any solid indication if this is good or bad to do. People say the zero balance accounts will be closed as IIB or "closed by credit grantor" even if they are not included in the bankruptcy filing because the banks get notified anyway. Would it be better for me to close my zero balance card I have had since I was 18 so it showed up as "closed by consumer" and "current" but not the IIB/close by grantor "derogatory" statement? I plan on doing the "bk to 700" plan and want to make that as easy as possible, especially considering this old account is Cap1. Thanks.

  • #2
    Hi...3 things..when do you plan on filing? Chapter 7 or 13? What is the "bk to 700" plan (never heard of it).
    Thanks!
    Filed Chapter 13 - 07/20/12
    Discharged 8/2/16

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    • #3
      Thanks for the response. Not sure WHEN I will be forced to file. Still scraping by right now but at a deficit every month with 42k in credit cards ($994 min payment) from poorly thought-out business expenditures. I am still running the business and making enough to pay the credit cards and keep the heat on and am having trouble finding a "real job" so I have been limping along. I pass the means test for chapter 7 so I will be going for that. The "bk to 700" plan is a post on the myfico boards so I am not sure if I can link it without violating the rules or anything. It basically has you open up credit as soon as you are discharged and opening new lines at set intervals with fixed balances to optimize your score.

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      • #4
        Hmmm..I'm going to leave this to one of our more experienced members or moderators to respond to.
        Filed Chapter 13 - 07/20/12
        Discharged 8/2/16

        Comment


        • #5
          Just my personal experience.....We filed 13 then converted to a 7. An AMEX Blue credit card that is soley in my name was zero balance and left open. Did not include it in the bankruptcy as there was not an amount due. (Totally forgot about it really. Have not used it in years.) However, I did include an AMEX green card that had a balance, so AMEX did receive notice. The AMEX Blue still appears on my credit report as open, with full credit line available and 28 years open. (Counts towards age of credit and available credit in calcing credit scores.) Anyway, I am in the 90 day club awaiting discharge next month. I am waiting to see if they do anything upon discharge, close it out or just leave it be. My credit score shot up 80 points upon filing, and has been going up ever since (2+ years). So it might depend on the creditor, what other stuff you have with them, and how they handle BK notifications.

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          • #6
            I wouldn't bother closing a card with a zero balance. When I filed for Ch 7, I assumed all my credit cards would be canceled by the lenders. Discover and MasterCard canceled my cards right after I filed as those were the ones I had balances on at the time of filing. My Kohl's card had a zero balance on it when I filed and somehow it has remained open and useable. I started using it after my discharge last July for small purchases (I think the most I have spent on it in one month was $75). Obviously all I can use it for is shopping at Kohl's, but I am hoping with responsible use it will help my credit score. My next step is to go get a secured major credit card (Visa or MasterCard) to help further rebuild my credit.

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            • #7
              Originally posted by teekay View Post
              I wouldn't bother closing a card with a zero balance. When I filed for Ch 7, I assumed all my credit cards would be canceled by the lenders. Discover and MasterCard canceled my cards right after I filed as those were the ones I had balances on at the time of filing. My Kohl's card had a zero balance on it when I filed and somehow it has remained open and useable. I started using it after my discharge last July for small purchases (I think the most I have spent on it in one month was $75). Obviously all I can use it for is shopping at Kohl's, but I am hoping with responsible use it will help my credit score. My next step is to go get a secured major credit card (Visa or MasterCard) to help further rebuild my credit.
              Thanks for the reply. I guess I will leave them open and take the gamble. Did your lawyer not include them in the list of debts/assets? How has life post BK7 been? I keep going back and forth between BK7 or debt management plan (not settlement) and eating beans and rice for the next 5 years....

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              • #8
                Only the accounts where you have a balance will be included on the list. Kohl's had a zero balance for us as well, and it has stayed open and we have been able to use it.

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                • #9
                  I was in a 13 and ALL accounts whether they had balances or not were listed. My attorney had pulled my credit report which showed all open/closed accounts and every one of them was included on the list of who would be sent a notice of the BK. Maybe different attorneys do different things.
                  Filed Chapter 13 - 07/20/12
                  Discharged 8/2/16

                  Comment


                  • #10
                    Originally posted by YolOmg View Post

                    Thanks for the reply. I guess I will leave them open and take the gamble. Did your lawyer not include them in the list of debts/assets? How has life post BK7 been? I keep going back and forth between BK7 or debt management plan (not settlement) and eating beans and rice for the next 5 years....
                    The attorney pulled a credit report before I filed and double-checked with me about any accounts with existing balances before she filed my paperwork. Since it was a zero balance, I'm not sure if it was even listed on my petition.

                    Life has been fine. I am two weeks away from the one-year anniversary of filing for Ch 7. I'm still here, not starving, etc. Everyone's situation is different... My main reason for filing was getting out from my underwater/over-taxed/flood-zoned house. I'm living elsewhere now very close by with my fiance, but I'm still paying minimal utilities and lawn care at the old house. Foreclosure is moving forward and hopefully the house is out of my name by this coming August.

                    Comment


                    • #11
                      Just wanted to provide a quick update. This thread has been on my mind.

                      I am glad we did not close all of our accounts before filing!

                      Our Kohl's card as well as our Target MC both survived the bk and we have been able to use them successfully for months now.

                      We filed in July 2017. Target raised our limit by $1000 in September, and they just raised it by another $1000 in March.

                      Of course we did not request this. But I'll take it!

                      Comment


                      • #12
                        Good to know. I had the target debit card before filing and I thought I'd lose that (as you probably know a target DC has no value on it's own and unless a payment is returned creating a liability there isn't even anywhere to properly place it on the petition). Glad they didn't cancel on me because that's my only rewards card of any kind. And now that I'm free of debt I can actually take that 5% off. Congrats to you!!

                        I had a few old and previously closed accounts with $0 balances that were listed. Those Creditors receiving the notice are like REALLY? and throw the paper in the shredder since there is nothing to legally collect on those non existent debts .

                        Comment


                        • #13
                          I was 99% sure, but just looked back through our petition to be 100% sure: The only creditors notified (on our Creditor Matrix) were the ones where we had a balance, and were therefore included in the bk. No other creditors with a $0 balance received official notice -- and certainly not any accounts that were closed. So that seems odd to me. What purpose would that even serve?

                          Comment


                          • #14
                            Some attorneys use one of two major bankruptcy packages, BestCase and Bankrupter, to file cases. The software allows the import of a tri-bureau credit report directly into the petition. I don't know for sure, but maybe the software automatically includes, on the matrix, only those that have a balance while still placing those accounts on Schedules D, E and F.
                            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                            Status: (Auto) Discharged and Closed! 5/10
                            Visit My BKForum Blog: justbroke's Blog


                            I am not an attorney. Any advice provided is not legal advice.

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