When going through the bankruptcy process in Southern California, it’s natural to have questions about your financial options, including using credit. Can you use credit cards during bankruptcy, and if so, what are the rules and implications? In this article, we’ll delve into what you need to know about credit during bankruptcy and why consulting a bankruptcy attorney in Southern California like Winterbotham Parham Teeple, a PC is essential.

Understanding Bankruptcy Basics

Before discussing using credit during bankruptcy, let’s briefly review the bankruptcy basics in Southern California. There are primarily two types of bankruptcy for individuals: Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy: Often called “liquidation bankruptcy,” this type discharges most unsecured debts. It’s a quicker process, typically lasting a few months.

Chapter 13 Bankruptcy: Also known as “reorganization bankruptcy,” this option involves creating a repayment plan to pay off all or part of your debts over three to five years.

Using Credit During Chapter 7 Bankruptcy

In a Chapter 7 bankruptcy, you may be wondering if you can use credit cards or obtain new credit while the process is ongoing. Here are some key points to consider:

Automatic Stay: When you file for bankruptcy, an automatic stay goes into effect. This prevents most creditors from attempting to collect debts during the bankruptcy process.

Secured vs. Unsecured Credit: Getting approved for new unsecured credit (like credit cards) during Chapter 7 is challenging. However, you might have options for secured credit, such as secured credit cards.

Consult a Bankruptcy Attorney: Before deciding to use credit during Chapter 7 bankruptcy, consult a bankruptcy attorney in Southern California by calling 800.400.9000. Expert attorneys at Winterbotham Parham Teeple, a PC can provide personalized guidance based on your situation.

Using Credit During Chapter 13 Bankruptcy

Chapter 13 bankruptcy involves a repayment plan, and your ability to use credit during this process differs:

Automatic Stay: Similar to Chapter 7, Chapter 13 initiates an automatic stay, providing temporary relief from most creditors.

Court Approval: Any major financial decisions, including obtaining new credit, often require court approval. Your bankruptcy trustee and the court will review whether it’s in your best interest and part of your repayment plan.

Creditors’ Approval: You might need permission from existing creditors to take on new debt while in Chapter 13. This can be complex and is another reason to consult a bankruptcy attorney.

Why Consult a Bankruptcy Attorney in Southern California?

Bankruptcy laws can be complex, and the rules regarding credit usage can vary. Consulting a bankruptcy attorney in Southern California is essential because they can:

Assess Your Unique Situation: Every bankruptcy case is unique. An attorney can evaluate your circumstances and provide tailored advice.

Navigate Legal Complexities: Bankruptcy law is intricate. Attorneys deeply understand the legal processes and can ensure you follow them correctly.

Protect Your Interests: Attorneys work to protect your rights and financial interests throughout the bankruptcy process.

Get Expert Representation

In Southern California, if you’re considering bankruptcy or have questions about using credit during bankruptcy, you must consult with an expert bankruptcy attorney from Winterbotham Parham Teeple, a PC by calling 800.400.9000.

Don’t take any chances; speak with one of our attorneys today and get the expert representation you need to start a debt-free life.