Credit Cards after Bankruptcy

Credit cards are not only a convenient method of payment but they can also often be a necessity when you are attempting to register for utility bills or rent a car. Many people who file for bankruptcy think that they’ll have to sacrifice the privilege of plastic, but this is not so.

Even though individuals and organizations that have gone bankrupt do pose a high risk for credit card companies, most of these companies have options that allow them to offer these borrowers credit without having to take any risks. These options come in the form of secured credit cards. With a secured credit card the borrower will be required to deposit a certain amount of money in a bank account in return for a card that has the worth of the amount deposited. The money in the account serves as security for the credit card company in case the borrower does not pay their bill.

Some debtors may be able to keep the credit cards they had before declaring bankruptcy as long is there is no balance owing on them. If a debtor has no balance owing on their card they don’t necessarily have to notify their creditors that they have declared bankruptcy but if the credit card company does find out about one of their clients going bankrupt they may choose to cancel this client’s card to avoid any future loss. Other companies will allow bankrupt clients to keep their cards after going bankrupt only if the client is willing to reaffirm the balance on the card and enter into a revised agreement.

Anyone who has had serious financial troubles might be wary about getting a credit card, especially after bankruptcy, but the truth is that aside from the convenience a credit card can provide, it can also be a great way to reestablish financial creditability. Paying credit card bills entirely each month on time is the first step in proving to future lenders that you are ready for more financial responsibility.