With the use of credit cards being so much a part of our every day lives, I am often ask the question will it be possible to maintain and use a credit card while in a Chapter 13 case. As credit card debt is one of the main reasons for the filing of bankruptcy to begin with, this can be a very touchy subject with the Bankruptcy Court and the Chapter 13 Trustee. As a general rule, the answer is “no”, you would not be allowed to c0ntinue to use a credit card during your Chapter 13. As with almost everything in life, there are exceptions but these are dealt with on a case by case basis.
The Bankruptcy Code would prohibit the use of a credit card to incur credit without permission of the Bankruptcy Judge. This would take place by filing a Motion and having a hearing before the Judge to set forth the reasons for the need of the credit card charges. This could take several weeks to obtain approval and again in most cases it would be very difficult to convince a Bankruptcy Judge that you needed more credit when credit cards probably played a large part in your being in Chapter 13.
Depending on where you reside, local customs and rules will dictate whether it would be possible to continue to use a credit card by agreement with your Chapter 13 Trustee. In our District, upon a showing of the need of the credit card for employment-related purposes, the trustee may be willing to enter an Agreed Order allowing the usage with a detailed accounting of any and all charges submitted to the Trustee along with the payment history showing that there is not carried an outstanding balance. This will generally arise in cases where individuals, because of their job, are required to travel and are reimbursed by the employer for the travel expenses. Many hotels/motels and rental car companies will not do business in cash and require a credit card. This would also be true of airline travel. By using the credit card the employee also has a detailed expense accounting for the employer. In my practice, I have seen cases where the trustee approved the use of the credit card for State Employees, flight attendants and other companies that require the employee to use a credit card when traveling and doing business as part of their job.
So, while not the norm, it is sometimes possible to continue use of a credit card while in a Chapter 13 case, but most likely it will be restricted to business use only and not for personal charges.