Credit Offers in Chapter 13

[aa06a47]

I am receiving several pre-approved card offers in the mail each month. Also been getting pre-approved home loans to buy out of my chapter 13. The credit card terms vary, anywhere from about 200/year charges for a 500 credit limit to no charge for a 6500 credit limit.

Has anybody in Chapter 13 got a credit card? I understand you should not obtain credit in a chapter 13. I have really been tempted to take my last offer for a 6500 credit card with no fee's. The credit card would not be used for anything other than an EXTREME emergency.

[lrprn]

I am receiving several pre-approved card offers in the mail each month. Also been getting pre-approved home loans to buy out of my chapter 13. The credit card terms vary, anywhere from about 200/year charges for a 500 credit limit to no charge for a 6500 credit limit.

Now that our Ch 13 is more than a year old, both hubby and I are getting a ton of these pre-approved offers too, aa...typically 2-3 every week.....some from the same lenders we bankrupted on...amazing, isn't it??

The way I understand it, pre-approved doesn't really mean you've been approved. It's just that your name fell out in a huge database search as a person who met the criteria. For many of my cc offers, since I travel a great deal for my job, they are coming through frequent traveler connections with airlines or through professional organizations.

If I would actually apply for the card, that's when the lender discovers we filed and will reject the application.

Talk to your lawyer about trying for one in case you have a cranky trustee. It's hard to explain why you can get a credit card even for emergencies if you are putting ALL your disposable income into your plan. I don't want to open that door myself...gulp!

Feeling your frustration....I feel the same when I have to rip up the better offers and throw them in the trash. But I know for us with the rocky Ch 13 start we had, it's the right thing to do.

[helpless]

We "opted out" so that we wouldn't receive any cc mailings during our 13. We have gotten a few we can finance you for a car while still in 13, but have thrown them out because somehow we find a way. We only have 8 months left, so I figure when we have 3 months left, I will opt back in and see what comes. To be honest, I just didn't want the temptation.

[wooisme]

my lawyer said "absolutely NOT" you cannot incur credit card debt when in a chapter 13 payback plan. You cannot purchase a vehicle unless given permission by the court. You cannot sell or refin without permission of the court. If you obtain a credit card while in the program your case can be dismissed. The only kind of credit card that you can have is either a visa check card OR a secured credit card.

[Skorpnix]

Funny, with me I was only 2 month into the bk and I was receiving pre-approved offers as well. Now, in my filings it states I may not acquiring any new DEBT of more than $500 unless it is medical or majoy emergency. I asked my lawyer about that and he stated if acquire new CREDIT or somehow one of your CC survive the filing (they didnt) then there really is no problem as it is just credit not being used. I actually decided to see if the card would approve me so I sent in the app and they actually gave me a card with a $300 limit. I have been cleaning up my credit reports and I thought this would also be a good way to get a credit history started while in bk. Now before people start ripping me for this which I understand why you would, I use it once a month if at all to buy a small meal at a fast food place and pay that off and have that reporting on my credit report. I would have spent that amount anyways but I thought I would kill two birds with one stone and I also now have a card in case something comes up (knock on wood) and I do need it for something other than food. Any opinons?

[wooisme]

mine said do not obtain any credit cards

[aa06a47]

I am curious as to how the trustee would find out unless it was because you missed a chapter 13 payment? I did an internet search and could not find anything concerning chapter 13 dimissed due to use a credit card.

I am not advocating that anybody go out and get a card. It would be nice, even a 300 limit.

[lrprn]

I am curious as to how the trustee would find out unless it was because you missed a chapter 13 payment? I did an internet search and could not find anything concerning chapter 13 dimissed due to use a credit card.
.

I don't think you will, aa - there's nothing in the code that forbids taking on new credit during Ch 13. Some trustees may choose to forbid it, but that's local custom.

I think Cathy Moran, a bk lawyer from CA, explains it best:

"Chapter 13 trustees, who are the overseers of Chapter 13 plans, are cautious about debtors incurring more debt while they are engaged in paying off old debt. New borrowing may be a sign that the debtor's budget isn't really feasible. The Code provides that new debt incurred without the trustee's consent is not discharged should the case convert to Chapter 7.

On the other hand, Chapter 13 debtors borrow money to replace vehicles routinely. So, the nature of the borrowing is important to the trustee.

If your question is really, can I get a credit card to start rebuilding a credit record, there is no law against it, so long as your application to get the card is truthful and you are able to pay off the balance every month.

Check the order confirming your plan and any local rules or trustee handbook you may have received at the beginning of your plan for any rules on new credit. Your attorney can help you with this issue." (from http://bankruptcy.lawyers.com/ask-a-...r-13-6710.html )