Has anyone been approved for a secured credit while in Chapter13?

[VolFan]

I also have a secured card that my attorney told me to get, as I needed it for travel/my job. Without required travel for continuing education there would be no job, and without my job there would be no Chapter 13 plan completion.

And as justbroke referenced, it specifically states in my plan that I am allowed to incur up to $1000 in non-emergency debt without having trustee approval. I'm not advocating that everyone rush out and get a secured card, but there are districts that allow some debt.

[underh20]

Follow the advice of your attorney. Having said that, our attorney advised us that secured credit card is fine. However we played it safe, and became authorized users instead. We did not notify trustee when we became AUs. Received discharged with no hiccups.

[RetiredArmy]

I'm quite certain that my attorney is not giving me bad advice in the hopes that I will need more of his services! He is a very experienced bankruptcy attorney in this district and knows quite well what matters to the bankruptcy trustee.

He said that it makes no difference whether I get a secured card now or after I am confirmed as long as it is a secured card. He is excellent at his job and I trust his legal advice. Other attorneys that I have used in my community for other services (e.g. Trust, family law) say, "Oh, [Atty Name] is the absolute best for Chap 13. I've done 7's, but I'd never do a chapter 13 on my own. He is who you want handling your case."

That is fine, I am not here to make waves, but the law is the law in all 50 states and I would hate to see someone lose their Chapter 13 protection because of faulty information. I am the type of person that researches and questions everything. Good luck with your plan.

[newlife13]

I don't disagree that a debtor should not incur new debt while in a Chapter 13. I don't even disagree that, without minimally seeking advice from debtor's attorney, that a debtor's case may be dismissed.

However, there are districts that allow debtors to incur debt, without permission, from $500 to $5,000. The bankruptcy code doesn't contain any provision which specifically states that you can't incur new debt, as it only strongly discourages this practice in a round-about way. The Trustee relies on parts of the bankruptcy code that says that they must make sure that you'll comply with the plan and that you will pay. This includes keeping you from incurring debt because they must insure that any new debt won't affect the plan; which is the bottom line.

(Many people don't know that a Chapter 13 is technically a "pending" bankruptcy. Once the plan is complete, the bankruptcy is then allowed to proceed to discharge. During the pendancy, any new debt could be technically added to the pending bankruptcy's plan of reorganization. This can make things complex and wreak havoc on the existing plan especially when it comes to feasibility and payments.)

A person should always ask their attorney first as to whether they can incur debt and at what amount. If it exceeds the thresholds for that specific district, the attorney should tell the debtor that s/he will need to seek permission from the Trustee. I was allowed to obtain a secured card during my Chapter 13 as it was not "new" debt (needed it for travel). A person should also check their Chapter 13 plan to see what, if any, provision is provided since many new "model" plans cover this topic specifically.

Unfortunately each District seems to dance to the beat of their own drummer. Some are less strict and some even let you keep as much as $2,000 of a tax refund every year. It's just too difficult to keep up and to maintain a chart which lists which districts allow what; as such, I will always defer to the local attorney.

Always ask your attorney before incurring new debt (unless your plan specifically lists exclusions).

Yes, I think my bankruptcy trustee is quite hands off and my district is liberal. My attorney said it's likely I will be able to keep my tax refund and my bonus. We'll see once I'm confirmed.

[newlife13]

The law that governs CHAPTER 13 and getting CREDIT while in AN ACTIVE CHAPTER 13 are quite clear in ALL 50 States and Territories. Not to be a blowhard but the LAW is the LAW. Read the paragraph "Making the Plan Work". http://www.uscourts.gov/services-for...kruptcy-basics

If an Attorney is telling their client that they can APPLY for a SECURED CREDIT CARD while their plan is ACTIVE and NOT DISCHARGED then the CLIENT is LIABLE and MAY have their case DISMISSED without getting a DISCHARGE.

Now, if you need to purchase a vehicle or have emergency repairs done to your home or vehicles, the trustee will normally approve the request as long as you show need and evidence. I had to get a replacement vehicle and asked for permission and was granted by my trustee while in my current Chapter 13.

I'm quite certain that my attorney is not giving me bad advice in the hopes that I will need more of his services! He is a very experienced bankruptcy attorney in this district and knows quite well what matters to the bankruptcy trustee.

He said that it makes no difference whether I get a secured card now or after I am confirmed as long as it is a secured card. He is excellent at his job and I trust his legal advice. Other attorneys that I have used in my community for other services (e.g. Trust, family law) say, "Oh, [Atty Name] is the absolute best for Chap 13. I've done 7's, but I'd never do a chapter 13 on my own. He is who you want handling your case."

[justbroke]

I don't disagree that a debtor should not incur new debt while in a Chapter 13. I don't even disagree that, without minimally seeking advice from debtor's attorney, that a debtor's case may be dismissed.

However, there are districts that allow debtors to incur debt, without permission, from $500 to $5,000. The bankruptcy code doesn't contain any provision which specifically states that you can't incur new debt, as it only strongly discourages this practice in a round-about way. The Trustee relies on parts of the bankruptcy code that says that they must make sure that you'll comply with the plan and that you will pay. This includes keeping you from incurring debt because they must insure that any new debt won't affect the plan; which is the bottom line.

(Many people don't know that a Chapter 13 is technically a "pending" bankruptcy. Once the plan is complete, the bankruptcy is then allowed to proceed to discharge. During the pendancy, any new debt could be technically added to the pending bankruptcy's plan of reorganization. This can make things complex and wreak havoc on the existing plan especially when it comes to feasibility and payments.)

A person should always ask their attorney first as to whether they can incur debt and at what amount. If it exceeds the thresholds for that specific district, the attorney should tell the debtor that s/he will need to seek permission from the Trustee. I was allowed to obtain a secured card during my Chapter 13 as it was not "new" debt (needed it for travel). A person should also check their Chapter 13 plan to see what, if any, provision is provided since many new "model" plans cover this topic specifically.

Unfortunately each District seems to dance to the beat of their own drummer. Some are less strict and some even let you keep as much as $2,000 of a tax refund every year. It's just too difficult to keep up and to maintain a chart which lists which districts allow what; as such, I will always defer to the local attorney.

Always ask your attorney before incurring new debt (unless your plan specifically lists exclusions).

[RetiredArmy]

Your attorney is providing incorrect information. I am not a "PAID ATTORNEY" but someone that is in the final phase of my Chapter 13 after trying unsuccessfully 3 times previously. Here in Nashville after the confirmation hearing, I was required to attend the Financial Readiness Class. It was at this class that my Wife and I were told MANY MANY MANY times that WE COULD NOT GET ANY TYPE OF CREDIT without the permission of the Trustee through our Attorney. We received a Certificate, Financial Planning Workbook and a Pamphlet that explained the ins and outs of our Chapter 13. Your attorney could care less because if you get caught you will probably have to use his services again after waiting 180 days and even then the Trustee may NOT allow the Chapter 13 to proceed. I had to purchase a car after getting into an accident that TOTALED the CAR. It was in the plan but I was upside down. My plan has paid the amount left over after the insurance paid the lien holder. I was approved to purchase a USED CAR within my current budget. I pay this outside of my plan with the permission from the trustee.

I wish you the best of luck and hope that you do not forfeit your Chapter 13 plan.

[RetiredArmy]

The law that governs CHAPTER 13 and getting CREDIT while in AN ACTIVE CHAPTER 13 are quite clear in ALL 50 States and Territories. Not to be a blowhard but the LAW is the LAW. Read the paragraph "Making the Plan Work". http://www.uscourts.gov/services-for...kruptcy-basics

If an Attorney is telling their client that they can APPLY for a SECURED CREDIT CARD while their plan is ACTIVE and NOT DISCHARGED then the CLIENT is LIABLE and MAY have their case DISMISSED without getting a DISCHARGE.

Now, if you need to purchase a vehicle or have emergency repairs done to your home or vehicles, the trustee will normally approve the request as long as you show need and evidence. I had to get a replacement vehicle and asked for permission and was granted by my trustee while in my current Chapter 13.

[sophieanne]

newlife13 - Hi. I wasn't in any way criticizing you . I know your lawyer told you to apply and I know it's a secured card so it's one of those cards where you can only spend what you've paid in.
I'm just happy when people make it through without incurring more debt (just my own personal quirk). I hope you can get what you're looking for.

[BNKRPTinNC]

What baffles me is why would anyone want to pay a fee for someone to hold your money. Not judging, mind you, as I needed every dime I could squander to make things work and the annual fee could be used elsewhere. If your sole purpose for obtaining a secured card is credit, correct me if I'm wrong but isn't your credit rating pretty much in limbo until discharge or dismissal? I know mine was until getting close to discharge. I had plastic in the form of a debit card through the bank that was tied to my checking account during my entire bankruptcy and it cost me nothing. Absolutely couldn't use more than I had. Granted it did nothing for my credit and I realize that credit is important in this day and age but why try to rush things when you will be amazed at how fast your score will climb once your Chapter 13 is completed. 2 years post discharge and I was in the 800's, able to get a refi on my mortgage and credit card companies galore soliciting for my business, just like the good old days. I have one card that has an $18k credit line and no annual fee, that I never carry a balance and that is more than sufficient. If I learned one thing, it is that if I can't pay cash for it then I can do without until I can. So far so good. The only thing I might slightly consider going into to debt for is another vehicle. Knock on wood, with the occasional repair I have been able to keep my current vehicles quite reliable.

[newlife13]

RetiredArmy - It's nice to read when others actually do what was told to us. After getting into BK why would anyone want to take on debt during the bk period.
Having said that a secured card is different, you can't use it unless you have put the deposit to pay for what you want/need.

My attorney told me to get one. He said a secured card is completely fine and the first step to building positive credit.

[sophieanne]

RetiredArmy - It's nice to read when others actually do what was told to us. After getting into BK why would anyone want to take on debt during the bk period.
Having said that a secured card is different, you can't use it unless you have put the deposit to pay for what you want/need.

[tm0101]

We got one in our 2nd year from USAA . No annual fee. Limit is what you put in savings account.

I'm with USAA also, I was going to try the AMEX, I'm ok with the annual fee of $35. I'll give it a shot.

[faithwolf]

We got one in our 2nd year from USAA . No annual fee. Limit is what you put in savings account.

[RetiredArmy]

When we went to our Financial Class, they were VERY ADAMANT about NO CREDIT, NO PAYDAY LOANS, NO STUDENT LOAN CO-SIGNING period. I would hate to have had my Chapter 13 Dismissed for FAILING to FOLLOW their INSTRUCTIONS and possibly facing more legal and financial troubles. Ask your attorney thats why they get paid the big bucks! lol