As part of the preparation for filing bankruptcy, you might think you should take out a secured credit card account before the bankruptcy destroys your credit. While using your credit before it is completely wrecked seems sensible, taking out any line of credit before bankruptcy could be a bad idea. Consult a bankruptcy attorney to determine how the bankruptcy court sees this action.
Identification
The question is not whether you can get a secured credit card before bankruptcy -- you can get a secured card at nearly any time because the security deposit makes this an extremely low risk to the lender -- but how the bankruptcy court will view the action. Your bankruptcy judge might consider the application for new credit right before bankruptcy irresponsible and an attempt at fraud, especially if you use the account to purchase luxury items.
Considerations
How a bankruptcy views a secured card taken out before bankruptcy depends in large part on when you apply for it. Usually, credit card purchases within 90 days cannot be discharged. If the purchases include luxury items or attempt to tie cash up into an account, the courts might view the transactions as fraud. This could negate your entire case.
Solution
Instead of taking out a secured account before filing for bankruptcy, do so after bankruptcy. Your bankruptcy likely will not matter to creditors as they market secured accounts to those in bankruptcy and other people trying to build credit.
Legal Advice
Always seek legal advice before filing for bankruptcy. Each bankruptcy case has unique characteristics that will determine if obtaining a secured account is appropriate, and only a lawyer can give you the proper answer. He might even find a way for you to avoid bankruptcy altogether. Creditors, for example, sometimes agree to settle on a debt for much less than what the borrower owes for fear of losing it all to a bankruptcy discharge.
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