Using an old credit card after bankruptcy.

wharty

Hi all.

Myself and my wife were made bankrupt in June last year and over the last few months we have received a couple of credit cards from Barclays and Lloyds. They were listed as accounts in our bankruptcy but there was no balance on either account.

Once we are discharged would there be any harm in using these pre-bankruptcy accounts to start building our credit ratings?

I was thinking of just using them on a monthly basis and paying off at the end of the month.

Thanks.

TheGardener

Hi - I have the same situation with a store card - there was no balance and the card hadn't been used for sometime prior to BR so I suspect it slipped under the radar. I didn't deliberately conceal it - just forgot about it and came across the card when having a clear out a few months ago. I set up an online facility with the card to see what would happen and all seems fine. As the credit limit is only £400, I don't think I'm doing anything wrong if I try and use it but so far I haven't had the courage to try. I thought the same - that I could try and use iit to credit build in the future.

wharty

Thanks Gardener. Does anybody have anymore info though regarding the legality of using the credit cards after bankruptcy? Is it legal or will i be in a spot of bother?

Carlabo

Hi, I'm in the same position. I have an American Express card which I haven't used in almost a year. I don't even have the card at the moment as I lost (and cancelled it) a while ago and then never called for a new card as I was trying to sort out my debts and didn't want additional cards available. I spoke to step change last week who said people have used remaining credit to pay to bankruptcy fees and I've been thinking about doing this, but I'm worried that might get me into trouble. My other thought was if I kept the balance on my Amex at £0 and somehow could cover the costs of keeping the card (for a gold card you've got to pay £175 a year for the benefit of having the card available - and then you can use the perks of the card, travel insurance etc) would the card remain active so in a year I can use it again and start building my credit score? Or would they close the card down regardless - in which case maybe I should use it to cover my bankruptcy fees? Any advice would be great. Thank you in advance!

TheGardener

Well I used my overdraft for pay part of my fees - I suppose its much the same. If it was just for BR fees when no other funds were available then I doubt there is much the OR can do - they are looking for spending trends over 12 months or more. One should never borrow money when you know you can not repay it but you wouldn't be the first to use available credit to pay for BR.

Warty - looks like you have found folk in the position but no-one with an answer for us yet - perhaps when the board gets busier in the week we might find someone who knows - but it looks like a bit of a grey area...

debtinfo

well the simple answer is that by going bankrupt you have almost certainly broken the terms of you agreement for the card. so no you cant use it anymore without explicit permission otherwise from the card company. The easiest way to find out is surely to ring them up say "hey i'm bankrupt, can i still use the account" and see what they say.

Im guessing that if you thought they would say yes then you would have already.

wharty

debtinfo wrote: »

well the simple answer is that by going bankrupt you have almost certainly broken the terms of you agreement for the card. so no you cant use it anymore without explicit permission otherwise from the card company. The easiest way to find out is surely to ring them up say "hey i'm bankrupt, can i still use the account" and see what they say.

Im guessing that if you thought they would say yes then you would have already.

What were the terms of agreement then? Is there a bankruptcy clause with credit cards? We didn't owe the card company any money and they weren't a creditor so i imagine that's the reason they keep sending new cards?

john1002

warty,

You need to find the original agreement if you still have it or maybe look online to see if a archived version, most cards do have a term that says if you go bankrupt the card will be cancelled, also dont forget that if the credit limit was over 500 then you would be breaking insolvency law by not informing the company that you were bankrupt of course once discharged and not subject to any IPA or extended bankruptcy then you would be fine.

In all the cases on here it is because you have slipped through the net for what ever reason, also by going bankrupt there is potential breaking of the law for the credit provider but hopefully someone with more knowledge and point to that.

So check your terms and then go from there, the last thing you want is to start using the card, break the terms get a default and end up having to pay the balance straight away.

John

wharty

john1002 wrote: »

warty,

You need to find the original agreement if you still have it or maybe look online to see if a archived version, most cards do have a term that says if you go bankrupt the card will be cancelled, also dont forget that if the credit limit was over 500 then you would be breaking insolvency law by not informing the company that you were bankrupt of course once discharged and not subject to any IPA or extended bankruptcy then you would be fine.

In all the cases on here it is because you have slipped through the net for what ever reason, also by going bankrupt there is potential breaking of the law for the credit provider but hopefully someone with more knowledge and point to that.

So check your terms and then go from there, the last thing you want is to start using the card, break the terms get a default and end up having to pay the balance straight away.

John

Ok thanks John. I wouldn't use it until i am discharged anyway and the £500 credit thing did cross my mind too.

alastairq

don't forget that if the credit limit was over 500 then you would be breaking insolvency law by not informing the company that you were bankrupt of course once discharged and not subject to any IPA or extended bankruptcy then you would be fine.

The £500 credit rule only applies whilst Undischarged.

Having an IPA/IPO does not mean the restrictions that apply to an Undischarged BR, still apply.

Once Discharged, regardless of an IPA/IPO, any amount of credit can be sought.

TheGardener

Well here's the thing - I have found the original T&C's and read every word of them and found nothing that sounds even vaguely like a clause that if I go BR the account will be closed. The only T&C that seems to come close is if a balance owing is defaulted on - and it wasn't as I didn't owe them anything. The Credit limit is £400 so as far as I can see - there is no barrier to me using the card. The only reason I haven't is because I like not having any debt.