Secured Credit Card during Chapter 13

[jn1520]

My wife and I recently filed Chapter 13 BK in New Jersey. We are 3 months into the plan and are now building up our disposable income. That said, our attorney says that we can obtain a secured card during BK to start the rebuilding process early.

I was under the impression this couldn't be done until the discharge following successful completion of the repayment plan. Does anyone have any knowledge (first-hand or otherwise) as to what our options are for rebuilding credit now? Thank you.

[SMinGA2]

It would depend on the district and your trustee's requirements. Some require permission to take on debt over $X amount. And some might view a secured card as not being 'credit' since the deposit backs it up.

[jn1520]

It would depend on the district and your trustee's requirements. Some require permission to take on debt over $X amount. And some might view a secured card as not being 'credit' since the deposit backs it up.

Thanks for the post, much appreciated! I'm also confused because I've read articles that say people receive numerous credit card offers in the mail within months of "filing" bankruptcy, but this contradicts the information out there saying that it's not possible to obtain a credit card (secured or not) until after your discharge.

Speaking of discharge, what exactly is this? Is this when you are done with your entire repayment plan or is this when you get the notice from the judge saying the debtor is discharged and confirms the terms of the repayment plan. I only asked because at this point I am in the plan (3 months now) and regularly make the payments. I'm so anxious to re-establish good credit ASAP.

Thanks for your feedback!

[LadyInTheRed]

When the judge confirms the term of the plan, it's called "confirmation."

You do not get a discharge until after your complete your plan.

Don't be in such a hurry to rebuild credit. Time is your best friend. If you get a secured credit card while still in BK, you will be ahead of the game in comparison to most Chap 13 debtors.

[blackngold]

From what I understand, SMinGA nailed it. I'm sure all states, Trustees, and districts vary. I'm in PA and I'm allowed $500.00 total w/o informing the Trustee. Anything more than that requires permission. I bought a new car last year(25 payments into a 60 month plan) w/ absolutely no objections from the Trustee at all. As long as you make your payments and stay in good standing it's not that difficult of a process. You will feel relieved as your plan rolls along. Hope this helps.

Good luck