Every year, thousands of people get the financial start they want through bankruptcy. Despite what many people believe, bankruptcy has been vital in the economic recovery of debtors around the country for many years. However, what happens after your discharge? Can you apply for a credit card after you have finalized your bankruptcy? Our Roseville bankruptcy lawyers invite you to keep reading as we discuss bankruptcy, your chances of obtaining a credit card, and when can you request one.
Best Time to Get a Credit Card After a Bankruptcy
Regardless of what chapter you filed under, you must wait until your bankruptcy discharge to attempt getting a credit card. As you may know, different bankruptcy chapters have different waiting periods. We will discuss the most common chapters below:
Chapter 7 is known as the liquidation bankruptcy. It is used by debtors who want to eliminate most of their unsecured debt. Petitioners must qualify before they are granted the opportunity of participating in Chapter 7. To qualify, you must show you don’t have enough disposable income to cover your debt. A court-appointed trustee oversees your bankruptcy process. This administrator will be in charge of reviewing all documents related to your bankruptcy as well as sell the non-exempt property. The money made out of selling your property will be distributed among your creditors by the trustee. Once you have completed your Chapter 7, the bankruptcy court will liberate you from most or all of your unsecured debt through a bankruptcy discharge.
Generally, a Chapter 7 discharge will last for ten years in your credit history. However, you can apply for a credit card after your discharge, which in most Chapter 7 cases can take three months to complete.
Chapter 13 – commonly known as a reorganization bankruptcy – allows debtors to pay back their arrears through a repayment plan. This chapter is available to individuals who have enough disposable income and do not qualify under Chapter 7’s requirements. Your repayment plan is designed considering things like your income, expenses, and the nature of all your debt. Commonly, a Chapter 13 reorganization plan can range from three to five years to complete. This means you will need to wait for three to five years before you can apply for a credit card.
It is always wise to consult with your bankruptcy lawyer to determine whether there are conditions or restrictions regarding requesting a credit card after a bankruptcy and what is the best time to request one.
What Credit Cards Are Available After a Bankruptcy Discharge?
Despite what many may think, you can apply for a credit card after a bankruptcy discharge. In fact, many lenders are willing to help consumers get their credit back. However, since your bankruptcy discharge will reflect on your credit history, you will not be able to get the same rates you would otherwise obtain with excellent credit.
Keep in mind once your debt has been discharged, you will not be able to file another bankruptcy. Therefore, you need to prepare and plan before trying to ask for a credit card following a bankruptcy discharge.
One of the most common credit cards you can obtain after a bankruptcy proceeding is a secured credit card. Secure credit cards require you to make a deposit which serves as collateral for securing the credit line. For instance, if you deposit $100 in the card, then $100 would be your spending limit. Different credit card companies predetermine the maximum amount of credit available for a specific card. Quantities can go from $200, $300, and $500 depending on the lender.
Another type of credit card that you can request after bankruptcy, is a retail card. Many businesses offer their credit cards allowing customers to buy at their store. While these are not the traditional credit cards, they can help you start rebuilding your credit.
It is always wise to know beforehand what kind of card is more convenient for you. Additionally, it is critical to making sure you can take on the responsibility without risking a financial setback. Try to avoid credit cards that may offer a good credit line but at sky-high interest rates. A skilled, experienced, and knowledgeable tax attorney can help you determine the best options available to you.
Roseville, CA Bankruptcy Lawyers Offering Free Consultations
Do not let debt turn your life upside down. At The Bankruptcy Group, our skilled attorneys have handled hundreds of bankruptcy cases, which allow us to provide nothing but high-quality legal services to our clients. Don’t make the mistake of believing bankruptcy will leave you with nothing to build your life upon. Let our experience and knowledge work for you. To learn more about your bankruptcy case in a free, confidential consultation, call our law offices today at 1-800-920-5351 or contact us online.