Credit Cards After Bankruptcy
Credit cards after bankruptcy: are they possible?
Many debtors are understandably worried about ever getting credit cards after bankruptcy. Is your credit shot for good? Will you ever be allowed to wield plastic again? Surprisingly, yes - there are options for the bankrupted to hold credit cards.
This may come as a shock, but credit card companies will allow you to keep your credit cards after bankruptcy. You must reaffirm the amount you owe, and sign a new agreement after the bankruptcy clears, but most credit card companies prefer to avoid their debt from being discharged in hopes of eventually being repaid. If you owe debt on the credit card at the time of your bankruptcy, the debt must be listed in your bankruptcy forms . If there is no debt, you are not legally bound to inform the credit card company of your bankruptcy proceedings.
There are plenty of credit card companies that will offer you a card. The explanation is simple as to why they would be willing to focus on a customer with a record of bankruptcy - first of all, the credit card company knows that you are debt-free, so on paper you pose a good credit risk. Second, federal law prevents an individual from applying for bankruptcy for at least six years after the initial filing of papers, so the credit card companies know that no matter what, you are unable to declare bankruptcy a second time.
Of course, these post bankruptcy credit cards will probably come with exceedingly low limits and high interest rates, so pay strict attention to your bills and be sure to send in all your payments on time. Doing so will also help you improve your credit after bankruptcy, if only marginally. But these few points are an integral part of building up your credit rating after a bankruptcy.
If you're nervous about using credit cards, you can apply for something called a secured credit card. Secured credit cards require you to deposit the amount of your limit before you make a purchase. For example, if you deposit $450, then your limit is $450. If you neglect a payment, the credit card company applies part of that deposit to the balance, keeping you in good standing. Unsecured credit cards, on the other hand, simply continue to rack up the debt and interest, making it very easy to fall into financial trouble once again.