Obtaining a Credit Card during a Chapter 13 Bankruptcy
Federal bankruptcy laws have in place numerous protections against abuse. One of these is stringent accountability of the debtor and legal agent who advises the debtor. Your College Station bankruptcy attorney will strongly advise you against obtaining or using a credit card while a Chapter 13 bankruptcy is current. Doing so can bring serious ramifications.
Accountability to the Trustee
In a Chapter 13 bankruptcy, the debtor has agreed to a repayment plan that will last for a specified amount of time, usually 3-5 years. This period is to be used for paying off current debts, and not incurring new ones. The debtor is not to increase his indebtedness through the use of/obtaining of a credit card without specific permission of the trustee. If a new credit card comes in the mail, then, you may be very tempted to use it, especially since it is likely you have been financially strapped for a period of time. However, absolutely do not use the card.
If you incur new debt without permission during a current Chapter 13 bankruptcy, the trustee will likely cancel your repayment plan and dismiss your bankruptcy. The reason for this is that in your plan you agree not to take on new debt, and therefore you are violating the agreement you made with the federal bankruptcy court. Indeed, in some circumstances you may face litigation for your violation if there is a reasonable suspicion that you committed fraud.
If You Need to Take on More Debt
If you run into a circumstance where you absolutely need to take on additional debt, it is extremely important that you petition the trustee for permission to do so with a “Motion to Incur Additional Debt.” The trustee will review your reason and render a decision. Among the matters the trustee will consider is how the additional debt will likely impact the agreed upon repayment plan. After all, you will not be repaying the entire debt, and so your creditors will want as much as they can obtain. Taking on new debt may reduce the amount that they will ultimately receive.
If your request is declined, under no circumstances should you then take on the new debt and disregard the trustee. You will create for yourself considerable trouble.
It Is Important to Have Legal Representation
When you file for bankruptcy it is very important that you take great care. It may well be in your best interests to hire a College Station bankruptcy attorney. Call Peterson Law Group to arrange a consultation at 979-703-7014 or 936-337-4681.