Chapter 13 and applying for new credit cards

[drc037]

Hi, brand new to the forum. I am filing Chapter 13 next week and I am wondering; can I apply for a secured credit card while I am in the repayment plan? I have been reading and it appears as if Chapter 7 clients can because of their discharge, but I am going to be in a plan at least 3 years. I want a secure card so I can reserve hotels and car rentals for business. Thank you

[krielly]

Credit cards are a nono during your 13.

Why not simply use a VISA or MC debit card for booking rooms and cars? If you were planning on getting a secured CC, there really isn't any difference.

K

[SMinGA]

I understand what you mean - as debit cards can be problematic for reservations due to 'holds' on funds available.

The answer will probably be district specific. I've seen some post that they must seek trustee permission for credit over the amount of $500. And others seem to require approval for ANY credit. Probably should ask your attorney as he/she will know what your trustee expects.

Personally I have not asked that question... I don't travel, and I don't feel 'ready' to have any type of credit card right now. I think I'm adjusting well to living purely on cash/funds in checking account - but its still early.

[krielly]

I guess my point being the fact that this would be a "secured" credit card, which means they would have no more credit than what they had deposited with the CC company to secure it.

If the OP has enough deposited to cover the limit you need for "hold funds" with the car rental/hotel, they should be able to cover that same amount to back their debit card..............

K

[Mensa1]

If the OP has enough deposited to cover the limit you need for "hold funds" with the car rental/hotel, they should be able to cover that same amount to back their debit card..............

K

Except that hold funds are calculated differently between a credit card (secured or unsecured) and a debit card.

[flyinbroke]

Yes...hold funds are still considered removed from your checking account and it seems to be a rare bank or CU that shows holds. If your hold is holding up funds, there is the danger of payments bouncing. In a 13 situation, this can spell disaster since you will have no disposable income to work with anymore. You only have what your budget allows you to have.

[drc037]

Chapter 13 and applying for credit cards

Thanks for all the input. In response to krielly, it is true, you can use a debit card for hotel and car reservations, but because of that fact those companies tend to have higher holds placed on the debit card. For example, I have seen rental car companies hold $500 to $1000 on a debit card, whereas they only hold $300 on a regular credit card. Also, when these companies hold funds, it can take one to two weeks to release funds back onto your debit card. Food for thought....

[drc037]

At least with a secured card, I could use that just for holding a room or a car, and pay with cash after the fact

[tigergem]

You have to petition the trustee's permission to incur ANY kind of debt in a chapter 13. I had a secured credit card - (for the same reason you said, for reserving a rental car but only in case my car broke down) - just before I filed, with only a $350 limit and it got closed down by the bank faster than you could blink as soon as they got the BNC notice.

And if I use my debit card from my bank, they darn sure DO take "hold funds" out of the balance IF you are even allowed to use it for that purpose. They didn't used to. New rules hahaha - since they aren't charging OD fees for OD under $10 and they won't OD your account at the POS anymore. NOW instead, they will even charge OD fees even if no charge is ever actually made, but only funds held, but they probably won't bother to tell you that until it actually happens to you and then you were supposed to have known.

[flyinbroke]

Tiger, that happened to me. I had a 40 dollar bar tab at a dinner, 45 in my play account and they took out the 40 dollars...but held 60 on top of that. Because of the holds, the actual charges bounced....I deposited 100 a few days later, but the bounced charges left me with 8 dollars...and several more bounces because my receipt showed me as having 100 plus what was left.

ANd they do hold way more on a debit than they do on a CC. Another reason I am reluctant to file now...I travel on business and we don't have biz cards.

[Mensa1]

Tiger, that happened to me. I had a 40 dollar bar tab at a dinner, 45 in my play account and they took out the 40 dollars...but held 60 on top of that. Because of the holds, the actual charges bounced....I deposited 100 a few days later, but the bounced charges left me with 8 dollars...and several more bounces because my receipt showed me as having 100 plus what was left.

ANd they do hold way more on a debit than they do on a CC. Another reason I am reluctant to file now...I travel on business and we don't have biz cards.

Hmmmm, those ended up being pretty expensive drinks after lates and sc's, didn't they flyinbroke

[flyinbroke]

No kidding. I called BS at the CU and they did clear them, but it showed me that I do NOT want to use a debit card till it is time to pay. I could have bought a Crown Royal distillery with those charges....

[tigergem]

Yeah, I had a $35 actual OD fee last week on a temporary hold that never was even actually charged. That was how I found about the new rules. The hold was completely accidental on the part of the merchant and the charge was never actually processed. Fortunately after the hold expired, I was able to get the bank to reverse the OD fee, and nothing else "bounced". I was just absolutely flabbergasted that they would charge an OD fee when no money ever actually left the account. Furthermore, this information is absolutely NOT contained anywhere in my current "personal statement of fees".

[flyinbroke]

Nope, holds do NOT count against you in an online ledger most of the time. You never see them. The playmoney CU asked if I ever check my account all snotty and I retorted "Your bank never shows holds...am I supposed to magically know they are there??" My main CU DOES show them which I do like. I found a hotel charge that went through and the hold remained for an extra week. Good thing I noticed it.

[tigergem]

Oh the "pending" transactions do show clearly in my online banking almost instantaneously. But the OD charge on "pending" transactions is all brand new. They didn't used to do that.

Verizon Wireless used to drive me crazy with that... not releasing a hold after the charge went through. My bank blamed VZW. VZW blamed the bank. But I used to have to call the bank every single month to get the hold released after the charge went through.