New Credit While In 13

[Skorpnix]

Hello All.
Long time reader first time poster.

I am currently in a 60 month Chapter 13 and have made my first 5 payments. Long ways to go. As you know you can have credit while in BK but you can only acquire up to $500 in debt unless it is medical or approved buy the trustee. I was going to get a secured card and work on my credit score while in BK buying having a "new" credit history. I recieved in the mail various unsecured offers and and finally got one that said pre-approved. Just for kicks I sent in the reply and low and behold they send me a credit card with a $300 CL. My question is this common or did I just run into a lucky creditor? BTW the creditor is Household Bank.
Thank you for the response in advance.

[imbroke2]

I have no answer, but I do have a question. WHY would you apply for new credit when obviously there's a reason you filed BK. We just filed in April but haven't used a card in well over a year. I don't want a card. If we can't pay cash for it, we don't buy it. And $300 or so won't put a new roof on the house or a car in the driveway. Why not just shred those offers? I think that you're setting yourself up for failure in the 13.

[FeelingHopeless]

Don't feel that I'm judging you at all ... however, we were told we couldn't have a credit card or debt of ANY kind before getting approval from the trustee and court. Now, granted that was a little over four years ago ... but the judge made a point of telling us those rules ... and even said, "Very few people break this rule ... and you DON'T want to see what happens when they do."

So, maybe they just put the fear of God in us ... and it's not that big of a deal. I'm just giving you a heads up though ... maybe the rules have changed. I'd never heard the $500 thing before ....

[Skorpnix]

Thank you for the reponses. My reasoning for the getting the card is two fold. One for emergencies as you never know what can come up and sometimes if you need to go to a destination out of state and you need a car or hotel if this is where the situation arises ( as I have family out of state and USA ) the sometimes dont take DEBIT cards to hold cars so I could use the credit card to hold it and then when I get there pay with cash or debit. Second to rebuild credit you need to have some type of history of using credit. We all know that. So if I buy just one meal a month for 7-10 dollars and then pay it off then I have a history and not get out of control. We are all in the same boat and I want this to be a one way trip and never have to return to BK so I know on my part I will not get out of control. Also, when I signed my forms for the court it states that I can not have more than 500 DEBT never credit. I asked my lawyer that and he stated that the cards you have that have no balance it is up to them if they want you to keep them ( they cancelled my account ) and any new CR company it would be up to them which he said he highly doubted that anyone would give me any type of credit. That is why I am suprised. I have this in writing from him stating this and court papers saying nothing over 500 DEBT nothing about credit though.
Any thoughts?

[$$only4ever]

My trustee was very very clear about obtaining new credit. The answer was none! I am not trying to be judgemental but you have just started this process and have a long way to go.

A suggestion: I keep at least $500 in my savings account for emergencies. If I need it I just transfer it to my checking account and use my debit card as a credit card.

The best advice that I can give you is to stay under the trustee's radar. Anything can happen in 5 years. If for some reason you had to modify your plan or the trustee did an audit and found that you had obtained new credit, your case could be dismissed. A $500 credit card is not worth that!!

[Skorpnix]

I fully agree on the savings account. BUT under the payment plan being able to get 500 dollars into the savings account is a very hard thing to do considering you have no "excess" money and if you do the trustee would want to know where you got that "much" to save. My lawyer actually said if are able to save then you should be able to send the trustee a little more each month as you were able to save for yourself. A CC that I wouldnt use unless it was for emergencies was/is easier to acquire. So do I go by what my lawyer said and what I signed ( which is no new DEBT of more than 500 which is different then having a LOC of any amount ) or just go with the "Fear of God" everyone is talking about here? Thank you.

[BKOnce]

Just keep it simple & secret ==>> "Don't ask, Don't tell" policy...

[FeelingHopeless]

Well ... an empty line of credit is one thing. But if you charge anything on it, won't it become debt? Not to nitpick or anything. I'm just saying ... if they say "No new DEBT" ... then as soon as you use that CC it becomes debt.

Our plan was 100% ... so saving anything wasn't really an issue. But we still kept our "emergency" money out of the bank. We bought a small, fireproof safe ... bolted it to the floor ... and built up a little emergency fund. There's no way I would've gotten a CC until I was discharged. Hell, even now I'm leary! haha

[$$only4ever]

Every trustee is different. My trustee was ok with a small savings account; not with a credit card.

[Skorpnix]

I actually never talked to my trustee about this "situation". My lawyer stated that the would have an issue with an "unusual" amount in a savings because they would question if you had money to "save" then you had money to pay. Same with a large secured CC. He said that if I could put down 300-500 on a card where did I get that money from? If I "saved" it then I could pay and if it was given to me would more be coming in turn more could be used to pay trustee. Now with a unsecured CC ( which I am still shocked that I could get ) there is no money upfront. So I was just going the path with no extra money being put anywhere and at the same time buy a $5 item every month and pay it off and in turn create a "new" credit history. Now I dont know what to think.

[helpless]

What state are you in?? My trustee stated the same thing that yours did. Haven't gotten or tried for a cc, but it does state that we can get one up to $500.

[wayne-o]

LIke others said, every trustee is different, mine does not allow for credit of any kind except for medical without trustee approval. The credit card for you probably will work the same as a savings account. If you make your trustee payments on time, you probably would not hear a peep from the trustee about anything.

[CATCHMEIFYOUCAN]

I'm curious, how much did you have to pay for that credit limit? I know most "secured," credit cards you have all these friggin' fees just to get it, so in the end you are paying for it?

I'm out of Bk, and I dropped $99 to Millenium Bank and got a credit card BUT I also had to drop another $300 to use as my credit limit. So the money goes into this savings account, I can drop more money to boost my limit (maximum $5000.) I only have to keep the card active for a year than I can close the account and get my money back if I wanted to. If I keep the card they charge an annual fee of $59 and they report the usage to all 3 credit bureaus.

CMIYC

[Skorpnix]

Helpless - I am in CA in the Central Dist.
CMIYC - Funny thing is that is an UNSECURED card. That is what has shocked me the most. I didnt have to put the money down (nor do I have any to do that). All I had to man up to is an annual fee of $59 and we all remember these back when we first got credit. I never plan on using it except for said $5 item per month just to have a credit history again. And God forbid an emergency.

[CATCHMEIFYOUCAN]

Well I hope over time they will increase that limit and your not stuck with just $300. (I use to work for a major car rental company and we would call the credit card and place a $500 hold on a customers car if they were renting a car for a week).

Make sure you read the fine print and that is all you are paying them (the annual fee).

I like the idea I have control of how much credit I want, I can increase my limit (up to the max) at any given time. I think I'm too scared to get an unsecured card - its too dangerous for a gambler.

Have fun with that ! Best of Luck, CMIYC