Credit After Bankruptcy Seminar

Posted onNovember 23, 2011 - 8:29 am by Admin | 0 Comments

Getting credit cards after bankruptcy is not as difficult as some believe. If a person does not incur any new debt after their bankruptcy discharge, they will eventually receive pre-approval letters in the mail. Many of these offers grant cards at 0% interest, a deal which is irresistible to the average consumer. However, before signing up for these offers, there are a few things you need to keep in mind.

Credit Cards After Bankruptcy Could Lead You Into More Trouble

Even if a credit card is approved at 0% APR, problems arise when the regular rate comes into play. According to Jeremy Simon, author of “Expect Credit Card Offers Even After Bankruptcy,” credit card companies often adjust their rates according to the credit history of the consumer. Bankrupt individuals end up paying more interest and late fees, even if they have several months of paying current bills on time. The article adds that in some cases, bankrupt customers may not even qualify for the teaser rates credit card companies are known for.

The situation gets worse if a bankrupt individual has poor spending habits. The article “Statistics about Bankruptcy Filings” says that 40% of families in the United States spend more than they make. And when they use a credit card, they will spend 112% more than if they had used cash or a debit card. Sadly, bankrupt individuals are included in this phenomenon. However, unlike many of their comrades, if they mess up they will be unable to use bankruptcy as a way out. As a result they may have to face the more serious consequences of unpaid debt including:

  • Wage Garnishment
  • Possible contempt of court if a debtor fails to show up at a hearing
  • Liens on any new property acquired after the bankruptcy
  • Judgments

In addition, sometimes credit card companies might suspect fraud if there are too many delinquencies. These suspicions tend to be greater for bankrupt individuals, since there is the presumption that they are more aware of their financial situation. Ultimately, financial institutions end up asking an obvious question; why get credit cards after bankruptcy if you don’t have the money to pay them?

Savings: The Best Method for Rebuilding Credit After Bankruptcy

Any money a person has for a credit card would be better served in a savings account. Even if one can only set aside $85 a month, in a year they would have over $1,000. The number goes up significantly higher if they can put away $100 or more.

Either way, once your savings reach $5,000, you may want to consider money market accounts or certificate of deposits, (also known as CDs). Both of these options offer higher interest rates, though certificate of deposits are slightly more stable. So, once your money starts growing, consider spreading it across multiple accounts.


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