Credit After Bankruptcy
Unfortunately, you’ve had to file for bankruptcy. Perhaps you had unforeseen medical expenses that exceeded what your insurance would cover. Maybe you fell victim to the downsizing of a company, losing your only source of income. Regardless of how it happened, now you have to focus on rebuilding your financial life and your credit.
The good news is that you can recover and even get credit cards again. It may be slow but, with some patience, you can rebuild your credit. Bankruptcy does not have quite as much stigma as it did at one time. Many people go on to be very successful after bankruptcy.
Wait for Discharge
Filing for Chapter 7 means that you have liquidated all your assets to pay off creditors. That process takes approximately four to six months. Chapter 11 says that you have come to a payment agreement to resolve your debt over a period of up to five years. Once that the bankruptcy is discharged, you can begin applying for credit cards or loans again.
Target the Right Credit Cards
You can and should apply for credit cards after bankruptcy. You’ll have to start somewhere, but don’t count on getting low rates, high limits or great perks. Some of the most popular cards for starting over according to Credit Karma are:
- Capital One Secured Mastercard
- Citi Secured Mastercard
- OpenSky Secured Credit Visa Card
- Green Dot primor Visa Gold Secured Credit Card
- First Progress Platinum Prestige MasterCard Secured Credit Card
A secured credit card will require a deposit to guarantee payment. Make sure you choose secured over prepaid cards, as prepaid cards do not update credit reporting bureaus on your payment history. When you get the card, charge something each month and pay it off on time, if not before. Following this plan will help to rebuild a positive track record of payment.
Get a Little Help From Family
If you have a sympathetic family member or good friend, ask if they can set you up as an authorized user on their credit card. After several months of on-time payments, you will get the benefit from their positive payment history. The bonus for you is that you don’t have to take on any debt of your own to start rebuilding your credit history.
Learn From Your Mistakes
Make sure that you plan for unforeseen circumstances. Pay yourself first and don’t take on more obligations than are necessary. Live well below your means.
If you have any questions about bankruptcy or how to rebuild your credit, contact an experienced bankruptcy law firm in Memphis, TN.
Thanks to Darrell Castle & Associates, PLLC for their insight into bankruptcy law and how to build your credit back after bankruptcy.