I am currently in Chapter 13 bankruptcy and I am wondering if there is a credit card company that would provide a credit card so that I might re-establish my credit. – Beth
While in Chapter 13 bankruptcy, you are prohibited from acquiring any new debt without the permission of the Bankruptcy Judge or Trustee. New debt or loans are generally not approved unless they are proven to be essential, for another car when yours has broken down or for new student loans, for example.
That being said, you will have offers for loans and credit cards even though your Chapter 13 hasn’t been discharged. You will also hear of people acquiring new debt during their Chapter 13 because rarely will the Trustee or Judge find out about it. The problem is if, somehow, they do find out that you have acquired new debt without the permission of the court, you are in jeopardy of having your bankruptcy dismissed without a discharge and the payments you have made so far will basically count as nothing. If your case is dismissed you will then be responsible for the debt and remaining balances you have with the creditors.
Loan companies and creditors do occasionally flood new Chapter 13 filers with offers because they know that you won’t be able to file Chapter 13 again for another 2 years. It may seem difficult to wait, and you may feel as though you won’t get any credit after your bankruptcy is discharged or you’d like to start reestablishing your credit as soon as possible. You will acquire credit again, but it’s best to wait for the discharge than to risk the work and payments you’ve already put into your current Chapter 13.