Having to file bankruptcy is an unpleasant thing, but despite what it might feel like, your financial life does not end when you file. One of the first questions most people have when looking into filing bankruptcy is whether or not they will be able to have a credit card. It turns out that applying for a credit card is not only possible in this situation, it’s actually recommended. This short guide will explain why and what you should know before applying.
Why a Credit Card Is Beneficial
The biggest reason applying for a new credit card after filing bankruptcy is so helpful is because it allows you to start building up credit once again. Filing for bankruptcy essentially eliminates all of your credit. It puts all your accounts back to zero. Having a credit card is helpful after a bankruptcy for the same reason it is helpful in any other situation. Building up credit can make it easier to be approved for loans, among other aspects that improve your financial health. This is more important when your credit situation is completely reset.
What You Need To Know
First things first, you need to know how long your bankruptcy is going to stay on your credit report. A chapter seven bankruptcy will stay on the record for 10 years, while a chapter 13 bankruptcy will last for seven years.
Secondly, there are a few things you should do prior to applying to another credit card after filing bankruptcy:
- Establish yourself – It is not a good idea to apply for a new credit card immediately after filling bankruptcy. Allow things to settle down for a month or two. Make sure you have some of the bigger, more important financial aspects taken care of first, such as your income, bills, and mortgages.
- Evaluate your habits – You filed bankruptcy for a reason; it is best to figure out what you were doing wrong so you can prevent it from happening again. Take some time to take a close look at your daily and monthly habits and identify changes that need to be made.
- Check your credit reports – Before you apply for a new credit card, make sure all your old accounts are properly indicated as included in the bankruptcy. You can get one free credit report per year from each of the major bureaus. Remember, the accounts will not be updated until at least 90 days after filing. If there are any errors, you will need to have them resolved before applying.
If you’re considering bankruptcy as a solution to your financial struggles, a bankruptcy lawyer in Memphis, TN can discuss your options. Call a law office today.
Thanks to Darrell Castle & Associates, PLLC for their insight into bankruptcy law and applying for credit afterward.