Having too much in credit card debt is the reason most people file bankruptcy, but the need for credit in an emergency still remains. So even if you need to file bankruptcy to get out of debt, you may still need access to credit from time to time in order to cover unexpected expenses like home repairs or medical bills. This paradox is puzzling to those that want to file bankruptcy to help improve their financial situation, so a quick run down on what to expect is in order.
Getting a credit card after you file bankruptcy is not only possible, but highly likely. Here are the most important things to know about bankruptcy and credit card debts:
• You can get rid of all of your credit card debt, or at least have the balances lowered to a fraction of what you owe, by filing for bankruptcy.
• When you no longer owe credit cards each month, you can use the money you were spending on minimum payments for other obligations. Elimination or reduction of credit card balances typically frees up a large chunk of disposable income for many consumers.
• Once your case is discharged, the credit card debts are no longer considered due and your card issuers cannot ask for repayment.
• Shortly after your bankruptcy case is discharged you may begin receiving offers from credit card companies, to take out a card and start rebuilding your credit. The interest rates on these cards will be higher than what you are used to, so be careful about accepting an offer and relying on a credit card after bankruptcy. After all, if credit card debt overwhelmed you prior to filing, you do not want to go down that road again in the near future.
Our best words of wisdom on getting a credit card and using it regularly after you have filed bankruptcy is to only do so if you are able to pay it off in full each month. Otherwise you will reenter the cycle of paying interest on top of interest, and racking up a balance that might become too much to bear. All of the hard work you do to get out of debt by filing bankruptcy should not be put at risk by jumping right back into a load of debt. Be careful about the new debt you acquire after filing bankruptcy, and work instead towards establishing an emergency fund so you do not have to resort to credit for large purchases or emergency situations.
For more information about bankruptcy, contact us at www.DsouzaLegalGroup.com. We will help by coming up with solutions that work for you.