Using a Credit Card While in Bankruptcy or a Proposal
A common inquiry posed by those either filing for bankruptcy or looking into consumer proposals is whether they can still have a credit card.
Often, when looking to the future, consumers wish to keep the card they currently have – especially if it has a small balance (or none at all).
Generally, this is to account for future unforeseen circumstances such as dental emergencies or sudden loss of income.
Especially since certain things are only accessible with a credit card (hotels or airline tickets, for example) many see the lack thereof as heavily restricting their lifestyle.
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Credit Cards & Bankruptcy
When you file for bankruptcy, you cannot keep your credit card (unless it was issued by a third party like your boss).
Instead, you need to hand it over to your trustee so that it can be cancelled.
This is true even if there is no balance on the card.
Credit Cards & Consumer Proposals
On the other hand, when taking this route, you can opt to keep the credit cards in your name.
The only catch is that the card must have no balance at the time of filing.
Since consumer proposals are different from bankruptcy, you can still opt to keep the card to give yourself the option of using it in the future.
However, many find that credit cards created the climate for debt to get out of control.
Due to this simple fact, most who file for consumer proposals opt against keeping their credit cards and look to other options to manage their financial future.
Credit Cards After Filing Bankruptcy
The good news is that, even after you file, there is still the option of accessing services which require a credit card.
Secured cards mean that you supply the balance, to be held on the card.
It gives you access to credit card services without the risk of payments getting out of hand.
This tool is also used by many to rebuild credit after proposals or bankruptcy.
To get a better picture of your credit future when considering either bankruptcy or proposal, seek the advice of a credit counsellor.
Information on Consumer Proposals
Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
Consumer Proposal Eligibility
How to Amend a Consumer Proposal
