Finding Secured Credit Cards During Chapter 13 Bankruptcy

by Mack Bartlett

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Recovering from bankruptcy takes years, but there are certain things you can do to speed up the process a little. There are a couple different kinds of bankruptcy – most people know that. But most people don’t know that the recovery methods and strategies are different for different kinds of bankruptcies. If you’re thinking about finding credit cards during chapter 13 bankruptcy, you’ll want to first consider the ramifications for the rules of your settlement.

Remember, in order to qualify for chapter 13, you have to agree to repay all your debtors during an agreed upon period of time – usually 3 or 5 years depending on your income. Chapter 13 can be better than other types of bankruptcy because it doesn’t cancel your debts. That means the damage to your credit won’t be as severe. The terms of the debt repayment are very specific though. They might prevent you from opening new lines of credit or taking on new debt until the full term of your bankruptcy is satisfied.

How do you know whether you can open or apply for a secured credit card during chapter 13 bankruptcy? Check with your trustee. They may not love the fact that you’re looking to get access to more potential debt, but a secured credit card is the best way to go because you have to put down enough cash to cover any balance owed on the card. And there’s no law against people in Chapter 13 applying for credit cards. It shows good initiative.

I’m sure you realize not all secured credit cards are created equal. Fees and interest rates are going to vary with every credit provider you investigate. Look for credit card issuers that pay interest on your security deposit, and look for companies that aren’t going to charge you an outrageous fee and a criminal interest rate if you’re just a day late on a payment.

Credit card companies are competitive with each other because there are big profits at stake. Let that competition work to your advantage.

I don’t know of any secured credit cards for chapter 13 bankruptcy specifically, but any time you can show the credit bureaus you’re using credit wisely they’re going to like it. The idea is to run up a balance on the card, but nothing higher than what you can pay off at the end of each month.

This is your chance to prove you can take care of the credit you abused in the past. Don’t blow it! It will take time, but I’ve talked to people who have bounced back from a bankruptcy to credit scores of over 750. You can get there too.