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Scura, Wigfield, Heyer, Stevens & Cammarota Blog

Getting Credit Cards During a Chapter 7 or Chapter 13 Bankruptcy

[fa icon="clock-o"] May 23, 2014 [fa icon="user"] Scura Law Firm [fa icon="folder-open'] Bankruptcy, Credit

credit_cardsMany people who have filed a bankruptcy may be surprised to receive solicitation during their bankruptcy for new credit cards. They may think that because they filed a bankruptcy, they will have difficult time obtaining any type of credit.

Credit Cards and Chapter 7 Bankruptcy

If you have filed a Chapter 7, you may find it surprisingly easy to apply for some credit cards. They may have a restricted balance and may charge very high interest rates, but then may be available.

Or they may be a secured card, which requires you pay your bill in advance, and you can then charge the card up to the amount you have deposited with the issuer.

While neither of these options may be ideal, you may have little choice. And they are willing to issue the card because they know you no longer have any other credit card debt and that cannot file another Chapter 7 for many years.

Credit Cards and Chapter 13 Bankruptcy

But if you have filed a Chapter 13, it may be more difficult to obtain any credit cards at first. Because a Chapter 13 requires a Chapter 13 Plan, a document that details your repayment of a portion of your debts, and which functions like a budget for your household.

A Chapter 13 demands that you use all of your "disposable" income to pay your existing debts, a credit card issuer may be concerned that you will have no additional funds available to pay for any credit card charges, even a secured one. They may not want to issue a card that you cannot reasonably use.

If you find yourself in this situation, you should not give up hope—your repayment of existing debt via the Chapter 13 plan provides future credit issuers with evidence of your repayment habits and ability to pay, and by the time your plan is complete, typically five years, you should have little difficulty in obtaining a credit card. 

If you have questions regarding bankruptcy, contact our New Jersey bankruptcy attorneys today.

Source: Fox Business, "During Chapter 13 Bankruptcy, Secured Cards Tough to Get

Posted by Scura Law Firm

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