Many people who go through bankruptcy will swear off of credit cards. They may even go start so far as to cut up the ones that they own. They blame those credit cards and their high interest rates for the debt troubles that they’re having. They don’t want to get into that situation again, so they decide they won’t use the credit card after they file.
However, the reality is that credit cards can be very helpful after you file for bankruptcy. You just need to know how to use them and what kind to use.
A secured credit card
What you can do is get a secured credit card. The lender will take a down payment. They will then issue the card with a limit at the same level as that down payment.
You can still use the card the same way that you would traditionally. You make purchases, and then you pay the card off every month. The lender simply doesn’t have any risk because, should you ever fail to pay off the balance of the card, they can just take your down payment and close the account.
Why does this help you? It impacts your credit score. Making those monthly payments on time can cause your score to go up. Eventually, your goal is to repair your credit score enough that you can get traditional credit cards and continue the process. You may even be able to do things like getting a mortgage loan or getting a car loan. But you have to show lenders that you are now a responsible borrower, and using a credit card after bankruptcy is one of the best ways to do it.
Working through the process
If you are considering bankruptcy, it may feel like a confusing and complex process. Just take the time to carefully look into all of the legal options at your disposal.