When you use Chapter 13 of the federal bankruptcy code to relieve you of your debts, you’ll have some restrictions of how you can manage your finances until your bankruptcy is discharged. One of the most important limitations is your use of personal credit. When you file, you will probably have to stop using your credit cards. Without credit, you’ll have to rely on cash to make purchases and you will not be able to make any major purchases without prior approval until your discharge.
Before you can get a new credit card, you will have to get approval from your trustee. In most cases, a request for new credit will be denied. While bankruptcy is not a punishment, your trustee will have to consider where you will get the money to pay a new credit card bill when all of your disposable income is supposed to be used to pay off the creditors in your bankruptcy.
There are exceptions and your trustee may allow you to finance repairs to your home if they can’t wait until your chapter 13 bankruptcy is discharged. For example, if part of your HVAC system breaks down or you need to replace your roof, you may be able to get approval. However, you probably won’t be able to finance a vacation while you are in bankruptcy no matter how badly you think you need to get away.
You can expect to start receiving offers for credit cards shortly after you start your chapter 13 bankruptcy. Be sure to drop those offers right in your shredder because if you accept one without the prior approval of your trustee, you could jeopardize your discharge. You bankruptcy may be dismissed if the trustee feels that you are unable or unwilling to comply with the terms of your repayment agreement.
