Credit Cards After Bankruptcy
Most debtors worry about credit after bankruptcy. Most believe that creditors will punish them for filing for the next 10 years. No, absolutely not. Creditors hope to scare debtors who consider filing, yet after discharge, remain as eager as ever to loan money, approve credit cards, and provide mortgages. After all, commercial creditors are in the business of loaning money and new loans represent their life's blood. Notice a few of the more common questions and answers (FAQ) regarding credit after a discharge:
- Can I keep credit cards? Yes - each creditor decides whether to cancel or retain accounts. Frequently, card companies offer to keep the account active if a debtor in signs a reaffirmation agreement in Chapter 7.
- Can I get new credit cards and loans? Yes - immediately after the case is over you can easily get secured cards. More attractive, high risk/low credit cards are increasingly available that do not require deposits yet do charge higher interest and late fees.
- Can I ever buy a home again? Of course - mortgage companies tend to consider discharge for 2 years, then rely primarily upon recent history, down payment and length of duration of the loan.
- Is my credit record ruined for 10 years? No, of course not - all credit histories are temporary, and assign greater weight to the most recent events. For everyone, history more than 5 years old is easily overcome by good credit over the last 2 years.
- Can I keep a credit card out of the bankruptcy for use later? No - all creditors, accounts debts and claims must be reported. If you owe money on a credit card at the time you file, you must list all account information. Failure to list information is considered misrepresentation and may result in serious fines and penalties. But afterward, you'll get a clean slate in Chapter 7.
Good news about credit cards after Bankruptcy
Filing eliminates debts in Chapter 7 almost immediately. In Chapter 13, debts are paid according to the debtor's ability over the course of the plan, then discharges remain balances. But neither Chapter erases bad credit histories. The best way to overcome a bad credit history and receive credit cards after bankruptcy is to consistently make timely payments in the future. With both Chapters, filing and discharge should eliminate financial strain and help debtors achieve this good credit history. As each year passes after discharge, the discharge itself and past poor performance become less important. Meanwhile, with timely payments, good credit history builds each month with the greatest weight, until eventually, in as little as 5 years, most debtors report far more credit availability and improved credit ratings than at anytime previously available. See also:
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