Active Chapter 13 - Will this work to rebuild credit?

[Chapter13Max]

I'm in an active Ch. 13, just had my meeting last Wednesday. I tried applying for a few cards today, including some secured cards, based on recommendations on this forum but didn't get approved for any of them. I'm wondering if having my parents add me to their credit card as an authorized user would help rebuild my credit. Their credit scores are pretty close to 850. I think they'd do it, especially if I told them I don't even want to use the card. Just have them add me and put the card away. Would this work? I'm trying to rebuild my credit as aggressively as I can.

[justbroke]

I don't think that anyone on this forum said to apply for credit cards right at, near, or around your 341 Meeting... especially in a Chapter 13. In most Chapter 13s, you need permission from the Chapter 13 Trustee to incur any debt. In some limited jurisdictions, the Trustee's allow credit capped at a certain amount (usually $2K - $5k on the upper boundary).

What we do recommend, after confirmation, is to ask if you can obtain a secured credit card. We may also recommend becoming an "authorized user" on a close friend/relative's account.

But, the bottom line is this. Please don't worry about your credit right now. Having just filed within the last 30-days, hardly any creditor is going to give you any credit. It's time to concentrate on your budget and keeping on plan and within that budget. If credit card debt is the main reason you're in bankruptcy, it should be the last thing to dive back into now.

That's just some advice from a very-seasoned debtor.

[Chapter13Max]

I couldn't really find 'when' to start applying so I figured I'd give it a shot now. My BK was because I took out debt on CCs while my business started up. It's been generating revenue for a while now and I've moved back in with my parents so my budget is finally manageable. My intention was to get a CC / pre-paid CC for business expenses which are about $1,000/mo, then pay in full each month. That's what I did for many years prior to starting my business.

As far as my question, it sounds like you're saying it would be beneficial for me to be added onto my parent's cards as an authorized user.. If I'm reading that correctly. Is that right?

[justbroke]

I couldn't really find 'when' to start applying so I figured I'd give it a shot now. My BK was because I took out debt on CCs while my business started up. It's been generating revenue for a while now and I've moved back in with my parents so my budget is finally manageable. My intention was to get a CC / pre-paid CC for business expenses which are about $1,000/mo, then pay in full each month. That's what I did for many years prior to starting my business.

You should still obtain your attorney or Trustee approval to obtain a secured credit card. I actually obtained a $5K secured card to cover my business travel expenses as well! That was very important for me, but I asked and made the case that it was necessary for business travel, which earned me money, which is how I can pay my Chapter 13!

As far as my question, it sounds like you're saying it would be beneficial for me to be added onto my parent's cards as an authorized user.. If I'm reading that correctly. Is that right?

Yes, that should be fine but you should still ask your attorney. So long as you're not obligated to pay the money, it should be okay. If this is solely for business expenses and corresponding reimbursement, it usually doesn't require trustee/court approval. A debtor is usually not restricted from credit when it is in the "regular course of business." I don't define regular or business.

[Chapter13Max]

That's all very good information, thanks for helping me with this.. One last question - is there any downside to doing this for my parents? I would hate for them to add me to their CCs and because I'm in a Ch 13 their credit is somehow damaged.

[justbroke]

It would not damage them unless you run up their credit cards and/or don't pay when you promised to pay.

[Chapter13Max]

Of course.. Yeah I won't even be using them. That's awesome to know! I'm going to see about getting that done at some point here, it seems like it has the potential to help me rebuild in a big way.