Using credit line before Chapter 7 discharge?

Anonymous · ‎07-07-2015

Hi everyone! I've already filed for Chapter 7 and my hearing with the trustee is in a little over two weeks. I have a credit line with PayPal Credit that I haven't touched in over 1 1/2 years and thought it would be a good way to start rebuilding my credit. Does anyone know if this is possible (I also have an Old Navy CC that I haven't used in about two years and thought of using that as another way to rebuild my credit too) or do I need to wait until I meet with the trustee or even discharge? I've put in a call to my attorney about this but I've been told she's been in court and have yet to hear from her. Was wondering if anyone here had an answer. Thank you.

0REDSOX7 · ‎07-07-2015

Have these accounts not been closed by the creditor? Many times, they get notice of public filings and will close the accounts automatically.

Now, if they are not closed, then GREAT. However, it would be unwise to use them until you are discharged. Some here will disagree, but, don't give the trustee any reason to dismiss your case. Technically, any debt incurred after your filing with the courts would not be allowed to be discharged, but, I would not risk it, personally.

BK Discharge 2/11/14

Currently in the garden.

Anonymous · ‎07-07-2015

Neither account has been closed. I even called PayPal Credit yesterday to verify the account was still open and they said yes, it's still active. I don't know about Old Navy (and that's fine by me).

ezdriver · ‎07-07-2015

Wait for your discharge then start your rebuild.

TRC_WA · ‎07-07-2015

Agree with all of the above...

Don't give the trustee a reason to dismiss your case. Wait till discharged... then start your rebuild.

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beezer32 · ‎07-07-2015

Wait. I wouldn't focus on the rebuild just yet. After discharge (or shortly before) run your credit reports and focus on clean up, THEN try and open a few rebuilding tradelines. A focus on rebuilding right now would be fruitless IMO. Your scores will tank, rise and fluctuate while your in active BK. Save your rebuilding efforts for later. I also agree with not upsetting the trustee. Your attorney will likely advise that it's not a good idea to incur new debt anyhow.

DaveInAZ · ‎07-08-2015

Yes, don't take a chance messing up your BK by going into debt before discharge. Also, PayPal Credit won't help your rebuild - it doesn't report ":good" usage to the credit bureaus, only derogatory usage (late, CO).

Anonymous · ‎07-08-2015

Thanks so much everyone! I'm anxious to start rebuilding, but I'll hold off. After all, what's a couple more months.

StartingOver10 · ‎07-08-2015

@Anonymous wrote:
Hi everyone! I've already filed for Chapter 7 and my hearing with the trustee is in a little over two weeks. I have a credit line with PayPal Credit that I haven't touched in over 1 1/2 years and thought it would be a good way to start rebuilding my credit. Does anyone know if this is possible (I also have an Old Navy CC that I haven't used in about two years and thought of using that as another way to rebuild my credit too) or do I need to wait until I meet with the trustee or even discharge? I've put in a call to my attorney about this but I've been told she's been in court and have yet to hear from her. Was wondering if anyone here had an answer. Thank you.

Usually the 341 is 30 days from the date of your Bk filing date.

You are two weeks away from your 341 so you filed Bk approximately 2 weeks ago.

It is waaayyyy to early to start thinking about using cards that may or may not have been discharged in your current Bk. The creditors do close out zero balance cards (sometimes) when you file but it isn't instant. Sometimes it takes a while to process the filing on your accounts. Sometimes creditors make a mistake and leave the accounts open when they are zero balance, there is no way to know.

However, as all the above have posted, it is not wise to start charging up your cards during your bk or to start applying for new credit. Wait until you have your discharge in hand (or on PACER).

In the meantime, the best thing you can do is rework your budget and start a savings plan so when you are discharged you have new habits that don't include running up debt on credit cards.

mynameainttracy · ‎07-08-2015

I closed my paypal credit account long ago, but when i used it they DID NOT report to the CRA's. This was when it was Bill Me Later and I closed it in 2012. It may have changed, but I would find out before I bothered using it as a rebuilding tool.