Credit Cards After Bankruptcy

Even though many people file bankruptcy to eliminate credit card debt, a surprising number of clients want to know when they can get a credit card after bankruptcy.  For many debtors, the decision to file bankruptcy is difficult.  Their finances have been spiraling downward to a point where they are unable to recover without the assistance of the bankruptcy court.  However, they have heard horror stories about people who file bankruptcy and never recover.

The misconception that filing bankruptcy forever ends your chances of obtaining credit, buying a new car, owning a home, or rebuilding your credit rating causes many people to wait far too long to file for bankruptcy relief. By the time the person makes the decision to file bankruptcy, his or her credit rating is severely damaged due to late payments and other negative marks.  The fear that filing bankruptcy will prevent the person from qualifying for credit in the future is a valid concern. There may be times when that person will need to have a credit card in the future to book a hotel room, rent a car, or pay for an unexpected emergency expense.

Using credit wisely is something that a debtor will learn about during the mandatory debtor education course required to obtain a bankruptcy discharge.  The debtor can use this information after the bankruptcy case is closed to obtain new credit and use it wisely to rebuild his or her credit rating.  Many debtors are surprised by the number of credit card offers they receive after filing bankruptcy. Unfortunately, some debtors choose to accept these offers only to discover that the credit card company is charging an outrageous interest rate that makes it virtually impossible to pay off a charged balance by making minimum payments.  The wiser choice is to allow some time to pass between completing a bankruptcy case and applying for a credit card.

Applying for Credit After Bankruptcy

Filing bankruptcy does cause an initial decrease in your credit score; however, within a year or two after bankruptcy, most debtors experience an improvement in their credit score.  One way to improve your credit score after bankruptcy is to apply for a secured credit card.  The lender will require you to place a deposit with the lender to secure your charges on the credit card.  By using the credit card and making each payment on time, your credit score will begin to improve. Before applying for a secured credit card, verify that the lender reports credit information to the three main credit reporting agencies.  As your credit score continues to improve, you will likely be able to qualify for a normal credit card with a lower interest rate.

Should You Get a Credit Card After Bankruptcy?

The answer to this question depends on the person you ask.  Some financial experts advise that you should avoid credit cards following bankruptcy.  However, in today’s economy, there are times when you may need a major credit card.  Learning to use credit wisely is the key to building a strong financial foundation and improving your credit rating so that credit will be available in the future when you need it.

When you feel ready to handle credit cards after bankruptcy, do so by creating and living within a budget to ensure that you are not spending more than you are earning.  Budgets also help you focus on your finances to keep spending within limits to avoid overextending yourself with credit.  While there will be unexpected expenses that may stretch your budget, taking control of your finances after bankruptcy will help you weather a financial crisis better.

Contact an Experienced Bankruptcy Attorney

If you are dealing with overwhelming financial problems and harassing debt collectors, contact Weston Legal, PLLC to discuss your bankruptcy options.  We will help you find the best solution to solve your debt problems.

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