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Getting a Credit Card After Bankruptcy

Let’s be honest: The first thing to know about getting a credit card with low interest and high limits credit card after filing for bankruptcy is that it will not be easy.  Credit cards for people with bankruptcies and credit cards that accept bankruptcies are not easy to come by with good terms after Chapter 7 or Chapter 13. However, there is no need to lose hope, there are a few options secured card options of post bankruptcy credit cards and ways to even get an unsecured credit card again.

  First thing’s first, the primary concern is how long one has to wait to apply for any credit card after bankruptcy. The answer varies on whether the person is trying to obtain an unsecured credit card after chapter 7 or chapter 13. The timeline is lower for those who filed for a chapter 7 because those individuals typically have to sell off assets and pay off as much debt as possible. In that case, an individual should be able to apply for a credit card after around three months, when the debts associated with the chapter 7 are typically discharged. The bankruptcy, however, will stay on the individual’s record for 10 years. For those who filed for a Chapter 13, or a credit card bankruptcy Chapter 13, it is recommended to wait 3-5 years before applying for a credit card. In a Chapter 13, the debtor (you) has to structure a repayment plan, which usually takes 3-5 years to pay off all of the debts owed. The bankruptcy is only discharged once the debts are paid off.  It is important to note, however, that the debt remains on the debtor’s record for about seven years after the filing date.

Once the date of discharge arrives, it is the responsibility of the debtor to check their credit reports on Equifax, Experian, and TransUnion to make sure the discharge has been reported and that the reports are showing zero balance on the credit reports. In situations where the discharge was not reported, the debtor may have to make calls and submit documents to show evidence of the date of discharge. After the reports are accurate, the debtor can begin to apply, understanding that many companies may just reject them due to the recency of the bankruptcy. The good news is, there are options.

Secured credit cards usually require an upfront deposit ranging from $200 to $1000. The deposit amount will range based on the credit limit of the card. If you are fortunate enough, you may find a credit card requiring nominal upfront fees and 0% APR. When the account is closed with a $0 balance, these funds will be returned – which is always good news to hear.

The best way to get an unsecured credit card after bankruptcy is to be added as an authorized used on a close family member’s account (partner, parent, etc.) This allows the user to improve their credit score by making timely payments on the credit card and improving their credit history. Ideally, the card should have a long, positive payment history with a high limit and low balance. If the person already has delinquencies of their own, it is best not to be added to that card/ on that person’s cards. The point is connect with a close family member in good credit standing and request them to help you do the same.

 Just as adding oneself to the credit card of an already delinquent person is ill-advised, so is taking an unsecured credit card with a high interest rate. While these cards do not require a security deposit (unlike secured credit cards,) these cards often offer very low credit limits with very high interest rates. These could further your debt and decrease your score further, should you ever fall behind. Unlike secured credit cards which present an opportunity of getting the initial fee back, the fees paid for delinquencies on an unsecured credit card are not returned.

Filing for bankruptcy does not have to be the end of the road for your credit history. It is important to note the different timelines one has to wait, depending on the different types of bankruptcies, before applying for a credit card. In cases where a close family member with good credit cannot add the debtor to an unsecured credit card  with a long, positive payment history, it is best for the debtor to try to obtain a secured credit card instead. The moral is: Some credit is always better than bad credit.

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