How to Survive Without a Credit Card –
Ways To Survive Without a Credit Card

The use of cash is on the decline in Canada, and many people in the country would agree that it is necessary to have a credit card in today’s modern society. In order to shop online you need a credit card and in order to book a hotel room, or rent a car on vacation you most likely need to use a credit card (even if you are going to pay cash for the room or vehicle rental.)

Unfortunately, if you declare personal bankruptcy or make a consumer proposal to your creditors you must surrender all of your credit cards (you can keep 1 zero balance card in a proposal) by law.

Section 158 (a.1) of the Bankruptcy and Insolvency Act states that a bankrupt must: “deliver to the trustee, for cancellation, all credit cards issued to and in the possession or control of the bankrupt.”

This is the law and there is nothing that your Trustee can do to allow you to keep any of your credit cards when going bankrupt.

Surviving Without a Credit Card While Bankrupt

In today’s modern society you need a credit card for many every day situations so while I am in bankruptcy does that mean I can’t shop over the internet, take a vacation, and always have cash on hand for everyday purchases? Fortunately, there are ways to survive without a credit card.

How Can I Survive Without a Credit Card?

Use a Debit Card: For everyday purchases it is always best to use your debit card. There is no risk of spending more than you have, and you can easily keep track of your purchases. You can only spend the money in your account unless you have overdraft protection, which is recommended you cancel before going bankrupt.

Some banks now even offer a debit card that acts like a credit card for internet shopping.

Get a Prepaid Credit Card: A Prepaid Credit Card allows you to purchase a “credit card” that will have a limit based on the value of the prepaid card; you cannot spend more than what you purchased the credit card for. When you purchase a prepaid card you will pay an activation fee. A Prepaid credit card can only be purchased in certain denominations.

Get a Secured Credit Card: A secured credit card works just like a real credit card, although your “limit” will be the same as the amount that you have deposited into an account with the secured credit card company. In order to have a $500 credit limit you must deposit $500 with the secured credit card company. If you spend $100 of your $500 limit, your limit will fall to $400 until you deposit more money in the account. If you deposit another $100 (always repay your purchases immediately) your limit will increase to $500 again, while you also have the option to deposit $350 to increase your credit limit to $750. The choice is yours!

A secured credit card company is good option to rebuild your credit as making purchases on a secured credit card appears on your credit report.

Joint Credit Card Options:

Get a Supplementary Card: If having a real credit card is necessary for you, then you can ask a family member or friend to apply for a credit card, in their name and add you as a supplementary card holder. As the approval is based on your loved ones’ credit report, your credit report won’t be checked. Your loved one will be liable for the purchases on your supplementary card so be very careful to use the supplementary card for emergencies only and be very responsible with this credit. Ask your loved one to have a low credit limit on the supplementary card. Make sure to pay any purchases on the card in full, on time, each month.

Losing access to your credit cards can be a drawback for many bankrupts, although your credit cards are likely maxed out and unusable if you are considering bankruptcy. The goal of going bankrupt is to get out of credit card debt. Learning how to live without credit – or manage it wisely – will help in the big picture and will help you manage your fresh start after bankruptcy.

Once you have been discharged from bankruptcy you can work on rebuilding your credit and then get a low limit credit card.

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