You have filed all the necessary paperwork, but your bankruptcy has not yet been discharged. You go shopping with your friend and learn that you can get twenty percent off your current purchase if you open a charge card.
Considering how great a deal it is, you think there is no way that you can pass it up! But should you open a credit card when your bankruptcy case is still pending? The short answer is most likely ‘no’, however you are able to apply for credit cards if you want.
In this blog, our South Carolina bankruptcy attorneys discuss the restrictions in applying for credit during bankruptcy and if you can keep your current charge cards during the process.
Applying for Credit During Bankruptcy
In our society, we are concerned about maintaining a good credit score. Many of us would not be able to have a car or get the things we want without using credit. Very few of us would be homeowners. (Who can realistically purchase a house in cash?)
Whether you are filing for Chapter 7 or Chapter 13, bankruptcy will determine when and if you can apply for credit. In a Chapter 7 filing, you will be able to apply for credit once your debt is discharged.
Since chapter 13 is a reorganization of debt, the matter is more complex. Individuals who file for Chapter 13 bankruptcy will make their scheduled payments through a Chapter 13 trustee. This trustee makes payments to creditors on your behalf. Before applying for credit, you will want to check with your Chapter 13 trustee or a bankruptcy judge to see if you are eligible to take out a line of credit.
Chapter 13 Exceptions
It is possible to get approved for a car loan or a new credit card during Chapter 13 bankruptcy. To get approved for a car loan, you will need to go through a lender that works with folks on Chapter 13 repayment plans. If you can wait until after your debt is paid off, you will save money overall.
What Happens to My Current Credit Cards?
If you apply for a Chapter 7 bankruptcy, the credit card company may close any current credit cards. In a Chapter 13 case, you may be able to keep your credit cards. Keep in mind the reason that you are filing for bankruptcy and that your spending habits are likely to put you in debt. So, even though you have access to charge cards, that does not mean that you should use them.
Reach Out to Our South Carolina Bankruptcy Attorneys Now
Filing for bankruptcy is an uncertain time. You may feel that you are ready to return back to normal, but that is not necessarily the case. If you have questions regarding your bankruptcy case, feel free to reach out to our legal team. To learn more or to schedule your free consultation, contact us online or by phone
