The Short Answer
Yes, you can sometimes get a credit card while in Chapter 13. But in most cases you must get permission before taking on new debt during your plan. Your plan is built around your income and expenses, so new debt has to be reviewed first. Small credit cards to rebuild your credit are often allowed, especially near the end. Always talk to your attorney before you apply.
When you file Chapter 13 bankruptcy, you agree to a repayment plan that lasts three to five years. That is a long time. During those years, life keeps happening. Your car might break down. A medical bill might pop up. You might just want to start rebuilding your credit.
So a common question comes up: Can you get a credit card while in Chapter 13?
This article explains the rules in plain English. It covers when you can get new credit, why you usually need permission first, and how to rebuild your credit the right way during your case.
The Short Answer
Yes, you can sometimes get a credit card while in Chapter 13. But there is an important rule. In most cases, you must get permission before you take on new debt during your plan.
Your Chapter 13 plan is built around your income and your expenses. New debt can change that balance. That is why the court and the trustee want to look at it first.
Getting a small credit card to rebuild your credit is often allowed, especially near the end of your case. But you should always talk to your attorney before you apply.
Why You Usually Need Permission for New Debt
In Chapter 13 bankruptcy, you pay back all or part of your debt over time. The court approves a plan based on your budget. Every dollar of your "disposable income" is supposed to go into that plan.
Taking on a new credit card adds a new monthly payment. That payment competes with the money you owe under your plan. The court wants to make sure new debt does not hurt your ability to finish the plan.
That is why most courts require you to ask for permission before taking on new debt above a certain amount. This is true for credit cards, car loans, and other borrowing.
If you skip this step, you could run into serious trouble. The trustee could object. In a worst case, your case could be dismissed. That would undo the protection your bankruptcy gives you.
When New Credit May Be Allowed
The court does not say no to everything. It looks at whether the new debt is reasonable and necessary.
New credit is more likely to be approved when:
- You need a reliable car to get to work
- A major appliance breaks and must be replaced
- You have a real medical need
- You are near the end of your plan and want to rebuild credit
New credit is less likely to be approved when:
- It pays for something that is a want, not a need
- It is a large luxury purchase
- It would make your plan payment hard to afford
Courts in North Carolina have made clear that not every expense counts as "necessary." For example, one local court ruled that a parent could not take on a new loan to pay for an adult child's college tuition during a Chapter 13 plan. That was treated as a choice, not a basic need.
The takeaway is simple. The closer the new debt is to a true need, the better your chances of getting it approved.
How to Ask the Court for Permission
If you want to take on new debt during Chapter 13, here is what usually happens.
- Talk to your attorney first. This is the most important step. Your attorney knows your plan and your local rules.
- File a motion to incur debt. This is a written request asking the court for permission.
- Explain the reason. You show why the debt is needed and that you can still afford your plan.
- Wait for approval. The trustee and judge review the request.
This process protects you. It keeps your case on track and avoids surprises.
Rebuilding Your Credit During Chapter 13
Many people worry that bankruptcy ruins their credit forever. That is not true. In fact, Chapter 13 can be the start of rebuilding your credit.
Here is the good news. As you make your plan payments on time, you are showing that you can manage money. That habit helps you over time.
Some lenders offer secured credit cards to people in bankruptcy. A secured card requires a cash deposit. The deposit usually becomes your credit limit. Used carefully, this kind of card can help you build a positive payment history.
But do not rush. Always check with your attorney before opening any new account. A small, smart step is better than a step that puts your case at risk.
To learn more about whether this path fits your situation, our bankruptcy FAQ page answers many common questions.
What North Carolina Debtors Should Know
North Carolina has one of the highest Chapter 13 filing rates in the country. In the Middle District of North Carolina, more than half of all bankruptcy cases are Chapter 13. The success rate here is also above the national average.
North Carolina courts take the rules seriously, but they also work with honest debtors. Your plan must be proposed in good faith. That means you cannot keep luxury items while paying creditors very little. Recent court rulings have made this point clear.
There is another important point. You cannot sell certain valuable property during your case without getting court approval first. The same care applies to taking on new debt. When in doubt, ask first.
If you are unsure whether bankruptcy is right for you, our Do I Need Bankruptcy? page can help you think it through.
Chapter 7 vs. Chapter 13 and New Credit
The rules about new credit are different depending on which type of bankruptcy you file.
| Issue | Chapter 7 | Chapter 13 |
|---|---|---|
| How long the case lasts | A few months | Three to five years |
| Need permission for new debt? | Usually no, because the case is short | Yes, in most cases for larger debt |
| Rebuilding credit | Can start soon after discharge | Can start during the plan, with care |
In a Chapter 7 bankruptcy, the case is short. You usually do not need permission to get credit afterward. In Chapter 13, the case lasts years, so the rules are stricter while your plan is active.
Not sure which one fits your life? Our Chapter 7 vs. Chapter 13 page compares them side by side.
What Should You Do Next?
If you are in Chapter 13 and thinking about new credit, here are calm, simple steps.
- Wait before you apply. Do not open new accounts on your own.
- Make a list of your needs. Decide if the debt is truly necessary.
- Call your attorney. Ask about a motion to incur debt.
- Keep paying your plan on time. This is the best way to rebuild credit.
- Be patient. Rebuilding takes time, but it works.
Taking these steps protects your case and your future.
We Are Here to Help
If you are dealing with this issue in North Carolina, you do not have to figure it out alone. Duncan Law can help you understand your options and decide how to handle new credit during your Chapter 13 case.
You can book a free consultation at any time. We serve Greensboro, Charlotte, Winston-Salem, Asheville, High Point, Salisbury, and communities throughout North Carolina.
Call the office closest to you:
- Greensboro: (336) 856-1234
- Charlotte: (704) 563-1224
- Winston-Salem: (336) 245-4294
- Asheville: (828) 348-5252
- High Point: (336) 294-5800
- Salisbury: (704) 297-4000
Frequently Asked Questions
Yes, in some cases. But you usually need permission before taking on new debt during your plan. Always talk to your attorney first.
You generally need permission for new debt above a certain amount. Your attorney can tell you the exact rules in your district.
You could face problems. The trustee may object, and in a worst case, your case could be dismissed. It is safer to ask first.
Often yes, if your car is needed and you can still afford your plan. You will usually file a motion to incur debt and get court approval.
It can. A secured card requires a deposit and helps you build a payment history. Check with your attorney before opening one.
No. Many people start rebuilding credit during their plan by paying on time. Your score can improve over the years.
Chapter 13 lasts three to five years. New debt can affect your plan, so the court watches it closely. Chapter 7 is short, so the rules are looser.
No. The debt must be reasonable and necessary. Luxury or want-based spending is usually not approved.
Your attorney files a motion to incur debt. It explains why the debt is needed and shows you can still afford your plan.
Often that is the safest choice. But if you have a true need, your attorney can help you ask for approval during the plan.
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Key Takeaways
- You usually need court permission before taking on new debt in Chapter 13.
- New credit is more likely approved when it covers a real need, not a want.
- A motion to incur debt is how you ask the court for permission to borrow.
- Making plan payments on time helps you rebuild your credit during the case.
- Getting credit without permission can put your whole Chapter 13 case at risk.
Attorney Insight
In my experience, the clients who do best simply call us before they apply for anything. A quick conversation can mean the difference between an approved request and a dismissed case.
