Credit Cards After Bankruptcy

Credit Cards After Bankruptcy

Personal Injury Lawyer

You can apply for a credit card once your bankruptcy has been finalized and your debts discharged. It’s likely, however, that you will only be approved for a couple of different types of cards. This includes cards that are specifically designed for people with bad credit and secured cards which require a deposit. After bankruptcy, you’ll likely have to pay higher interest rates or other fees to have these types of cards.

Bankruptcy and Your Credit

Unfortunately, filing for bankruptcy will severely lower your credit score, and it will probably last for quite a while. This happens because your creditors never received the entirety of the debts that were owed to them. Bankruptcy makes you look riskier in the eyes of lenders, which will impact your ability to receive credit. That doesn’t mean you will never be able to have credit again, however. You should expect to pay more for credit you receive after bankruptcy, though.

When you file for a chapter 7 bankruptcy, all of your debts are discharged, but the record of your filing will remain on your credit report for up to 10 years. With a chapter 13 bankruptcy, things work a little differently. Your debt will be restructured, instead of being discharged, and you will pay off the restructured debt within three to five years. Filing a chapter 13 bankruptcy is not as harmful to your credit, but it can remain on your report for up to seven years.

Fortunately, you can improve your credit score considerably after bankruptcy by using your new credit responsibly. Make sure to make your payments on time, and utilize 30% or less of your available balance.

Being Smart With Credit After Bankruptcy

Filing for bankruptcy is a way to wipe the slate clean when it comes to your finances. The best thing you can do afterward is to take advantage of any new credit by managing it responsibly. For example, you’ll want to make sure that you incur very little new debt that exceeds 30% of your available credit. Ideally, if you’d like to avoid expensive interest charges, pay your balances off in full every month.

One of the most important things you can do is to pay all of your credit card bills on time. Your credit score is heavily influenced by your payment history. Having a history of on-time payments will help boost your credit score.

For any questions about how bankruptcy might affect you, contact an experienced bankruptcy attorney, like a bankruptcy lawyer in Memphis, TN, in your area.

 


 

Thank you to the experts at Darrell Castle & Associates for their input into bankruptcy law. 

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