But the presence of a zero-balance credit card in bankruptcy filings raises questions for many potential bankruptcy filers. While filers are required to list all of their creditors when they file their petition, it is sometimes unclear whether card issuers are considered creditors if a filer owes them nothing.
Yet leaving a card issuer (or any creditor) out of bankruptcy paperwork could be considered fraudulent in certain situations and may lead to a case being dismissed.
Credit cards with no balance generally fall into one of two categories:
The penalty for those found guilty of improperly omitting creditors in a bankruptcy petition can be severe: fines and jail time are not uncommon. That's because omitting creditors may be considered an act of bankruptcy fraud, a crime that the court takes seriously.
But the laws that govern which creditors must be listed and which can be omitted are complex. That's one reason the U.S. Courts system, which regulates bankruptcy courts, recommends working with a bankruptcy lawyer during the process of filing for bankruptcy.
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