Q: Are there credit cards available for people in a Chapter 13 bankruptcy to start building up a high credit score again?
You have to be very careful with how you use credit while you are in Chapter 13, and in most cases you can not have unsecured credit cards at all while you are in the middle of a Chapter 13 bankruptcy proceeding.
Remember that with a Chapter 13 bankruptcy, you reorganize your debts and pay off some or all of your financial obligations over a period of three to five years. Priority is given to creditors such as mortgage lenders and auto finance companies, because you have secured loans with them. Additionally, your bankruptcy agreement may call for you to pay off a certain percentage of your unsecured debts, such as credit card obligations.
Since many people going through Chapter 13 have sizable credit card debts, bankruptcy courts are reluctant to allow you to open new credit cards, and rack up additional debts of this nature. This make sense, considering you're already trying to pay off existing creditors.
For this reason, generally speaking, you typically may not use credit cards or incur any non-emergency debt of more than $1,000 while in Chapter 13. You're often not allowed to buy anything on credit, or even refinance your mortgage, without first obtaining written permission from your Chapter 13 Trustee.
So the bottom line is this: to obtain new credit while in Chapter 13 bankruptcy, you'd have to get the approval of your Trustee and you'd have to abide by the local rules of the bankruptcy court in your state.
The best place to start is by asking your bankruptcy attorney how your jurisdiction usually handles request for new credit. It may be the case that unsecured credit cards are denied, but a request for a secured credit card - which can also help you rebuild credit - would be approved.
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