Can I Get a Credit Card After I File for Bankruptcy?
Posted: Friday, February 14th, 2020 at 11:04 pm
Can I Get a Credit Card After I File for Bankruptcy?
The process of filing for bankruptcy is a stressful, demoralizing experience that can wipe out your assets and obliterate your credit score. Rebuilding your financial status after bankruptcy can take years. It can be challenging to get a credit card after bankruptcy, but it is possible and you do not have to wait until your credit has been fully restored.
How Does Bankruptcy Affect My Credit?
While going through the bankruptcy process it will be tough for you to get approved for credit. Not all bankruptcies are the same, however, and exactly how and how long your credit will be affected depends at least in part on what kind of bankruptcy was filed.
Chapter 7 Bankruptcy
Filing Chapter 7 bankruptcy is a last resort to help reset your finances when you lose the means to pay monthly bills and expenses, clearing away unsecured debts, such as credit cards. When you file for Chapter 7 bankruptcy, the process of liquidating all of your assets to pay back creditors can take up to six months.
Chapter 13 Bankruptcy
In chapter 13 bankruptcy, a repayment plan can be set up if you have enough income to keep with the payments. Your assets are not liquidated and repayment plans are typically set up to last three to five years.
Your credit score will be affected by either form of bankruptcy. Chapter 7 bankruptcies stay on credit reports for 10 years and Chapter 13 for seven years.
Can I Get a Credit Card After I File for Bankruptcy?
You would think that credit card issuers would stay away from anyone who has filed for bankruptcy. The fact is that after filing, most people get inundated with credit card offers, as some banks and lending institutions will actually seek out those who have gone through bankruptcy.
Whenever signing up for a credit card, it is crucial to read the fine print to know exactly what you are getting into. This is even more important after a bankruptcy, as these finance companies will offer credit cards with high-interest rates and exceptionally high fees to go with it. Trying to find a card without annual or any other unnecessary fees will be challenging, but they are available.
The most important thing to consider when applying for a credit card is to make sure you can afford to pay off the balance every month to avoid interest charges and head down another dangerous financial path.
If at all possible, it is recommended that those fresh out of bankruptcy hold off on taking on a credit card or any other type of revolving credit. Take the time to rebuild your credit and get your financial life in order before venturing out into the credit world again. There are a number of lower-cost options to traditional credit cards to get you back on your feet.
How Long Will It Take to Rebuild My Credit After Bankruptcy?
The journey back from bankruptcy to building good credit takes time, patience, and adjusting the types of behavior that led you to this point in the first place. As simple as it may seem, just paying your monthly bills on time every month is a surprisingly easy way to build up your credit.
Setting up and following a strict budget based on your income and expenses is essential to changing the way you approach your finances. A budget will help you keep track of exactly where you stand and help you to develop better spending habits over time as your credit is restored.
Should I Apply for a Credit Card After Bankruptcy?
The financial residue left in the wake of bankruptcy will take years to completely remove, but the impact on your life will begin to fade over time. Paying your bills on time and sticking to your budget will result in a gradual improvement of your credit.
People file for bankruptcy every day. It is not a pleasant experience, but the process is there help those who fall into financial problems after the loss of a job, a medical emergency, or a wide range of other personal issues that put you in a bad place. If you realize it is a temporary state and follow the necessary steps, your credit will be restored before you know it.
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