German YusufovMarch 2, 2025

Filing for bankruptcy can be a difficult decision, and if you’re considering it, you’re likely wondering what will happen to your credit cards. Losing access to credit might feel like you’re giving up a financial lifeline, but understanding how credit cards are handled in bankruptcy is crucial.

At Yusufov Law Firm PLLC, we help individuals and businesses in Arizona regain financial stability. Whether you’re dealing with overwhelming credit card debt or medical bills or trying to save your business, we’re here to provide clear, reliable guidance. One of the most common concerns people have is whether they can keep a credit card after filing for bankruptcy. Let’s break it down so you have a clear picture of what to expect.

Credit Cards and Bankruptcy in Arizona

If you file for bankruptcy in Arizona, you will typically have to give up your credit cards. Here’s why:

  • You must list all creditors – Bankruptcy laws require you to disclose all your debts, even if you have a credit card with a very small balance.
  • Credit card companies may cancel accounts automatically – Most credit card agreements include a clause that allows issuers to cancel your card once they learn about your bankruptcy.
  • The bankruptcy trustee will review recent payments – If you made large or preferential payments on certain credit cards before filing, the trustee might flag them as an attempt to favor one creditor over others, which could complicate your case.

People sometimes think they can keep a credit card if they pay down the balance before bankruptcy, but, for the reasons discussed above, this is usually not a good idea—any payments you make on a credit card shortly before bankruptcy can be undone by the bankruptcy trustee, and, even if the payments are not undone, the credit card company has no obligation to let you keep the card.

The Rare Exceptions and Nuances

While most people lose access to their credit cards after filing for bankruptcy, there are a few situations where it might be possible to keep one. Let’s explore these cases in more detail.

Zero-Balance Credit Cards

Some believe that if they have a credit card with no balance at the time of filing, they can keep it. Technically, this is possible, but in reality, it’s unlikely.

Even if you don’t owe anything, your credit card issuer may still close your account after learning about the bankruptcy. Credit card companies don’t just look at your balance—they consider your overall creditworthiness. If you’re filing for bankruptcy, that’s a red flag for lenders, making it unlikely they’ll allow you to keep the account open.

Secured Credit Cards

Secured credit cards work differently than regular credit cards because they require a cash deposit as collateral. This setup sometimes gives you a slightly better chance of keeping one after bankruptcy, but it’s not guaranteed.

  • If your secured credit card is not listed as a debt in your bankruptcy, and you keep making on-time payments, the issuer might let you keep it.
  • However, some issuers still choose to close the account, especially if they’re notified of your bankruptcy filing.

If you want to keep a secured credit card, it’s best to contact the issuer directly and discuss your options.

Business Credit Cards

If you own a business and use a credit card solely for business expenses, the rules may be different. In Chapter 13 bankruptcy, where a repayment plan is established, you may be able to keep a business credit card if it’s deemed necessary for your company’s continued operation.

That said, if you guaranteed the credit card (which is typical in most cases), the issuer will likely close the account upon your bankruptcy filing.

Arizona-Specific Considerations

Arizona follows federal bankruptcy laws, but some state-specific exemptions may impact your financial situation. While these exemptions don’t directly affect credit cards, they can play a role in how other assets are protected, which may influence your overall financial strategy.

Since every case is different, it’s best to speak with an experienced bankruptcy attorney to understand how Arizona laws apply to you.

Post-Bankruptcy Credit Card Scenarios and Rebuilding Credit

Bankruptcy doesn’t mean you’ll never have a credit card again. Many people receive new credit card offers surprisingly soon after their bankruptcy case is closed.

New Credit Card Offers

It might sound strange, but some lenders will offer credit cards to individuals fresh out of bankruptcy. Why? Because at that point, you have no outstanding debts, making you a lower risk for defaulting again.

  • These offers usually come with high interest rates and lower credit limits.
  • Some cards require security deposits, making them secured credit cards.
  • If you accept one of these offers, be cautious and read the terms carefully.

Rebuilding Credit

Filing for bankruptcy isn’t the end of your financial journey—it’s a fresh start. Here’s how you can rebuild your credit responsibly:

  • Apply for a secured credit card – These cards require a deposit and are designed for people with damaged credit.
  • Use credit wisely – Make small purchases and pay them off in full each month.
  • Monitor your credit reports – Check for errors and ensure that accounts are reported correctly.
  • Stick to a budget – Avoid accumulating new debt and focus on saving money.

Over time, with responsible financial habits, your credit score will improve, and you’ll be able to qualify for better credit opportunities.

Understanding the Core Purpose of Bankruptcy

Some people want to keep a credit card for emergencies, but the reality is that bankruptcy is designed to help you break the cycle of debt. Holding onto credit cards often leads people back into financial trouble.

The goal of bankruptcy is to give you a clean slate. By wiping out debts, it provides an opportunity to rebuild without the constant burden of high-interest payments. In most cases, keeping multiple credit cards goes against that purpose, which is why it’s generally not a good option.

Taking the Next Step: Your Financial Future in Arizona

If you’re struggling with overwhelming debt, bankruptcy may be a path to relief. But you don’t have to figure it out alone. At Yusufov Law Firm PLLC, we’re committed to helping Arizona residents make informed decisions about their financial future.

We’ll assess your situation, help you understand your options, and guide you through the bankruptcy process. Whether you’re facing foreclosure, mounting medical bills, or business debt, we can help you move forward with confidence.

Call us today for a free consultation. If you’re in Tucson, reach us at (520) 745-4429. For Mesa and Phoenix residents, call (480) 788-0098. Let’s take the first step toward financial freedom together.