A Bankruptcy Lawyer’s Blog

How to Get Credit After Bankruptcy

Many people worry about not being able to get credit after bankruptcy. Happily, this fear is unfounded. Years ago, we generally relied upon the banks providing secured credit cards to us in order to reestablish credit. While secured credit cards are still available, it is no longer necessary, in most cases, to obtain one, because they are generally available to everyone even a day after you have filed your bankruptcy case.

Getting approved for a secured card is virtually guaranteed. In this situation, you would deposit a sum of money, as little as $200 in many cases, in the bank. You would not be able to access this money. It stands as a reserve to guarantee payment for the credit card that the Bank will issue you. Thus, the debt is secured by your bank account funds on deposit. If you do not pay your bill when it comes due, the bank can take the money out of your account.

It is probably going to be possible for you to obtain an unsecured credit card even immediately after filing bankruptcy. Credit card issuers even target recently filed bankruptcy clients with offers of unsecured credit. Credit card issuers know that you can not file another bankruptcy for several years and that most of your other debt, if not all of it, has been discharged in your bankruptcy. So, you are a better credit risk after filing bankruptcy than you were before.

Be careful, however, when obtaining new card after filing a bankruptcy. Credit card issuers frequently target consumers with credit cards that have lots of hidden fees and unnecessary insurance. It is not, in my opinion, a bad thing if the credit card issuer charges a monthly fee of less than $10, or if the card carries a higher interest rate. If you keep your balance low the interest rate will not be much of a concern. Similarly, a modest monthly fee is probably an acceptable charge when you are initially rebuilding credit after bankruptcy.

You should avoid disability insurance, non-payment insurance, and other charges that sometimes accompany offers of credit to people after they have filed bankruptcy. You do not need these additional products. I have seen cards that start out $180 in debt on a $200 limit. Obviously, this is not something that you want to do.

If you are worried about not being able to get credit after you file bankruptcy, relax. The days of not being able to get credit easily after a bankruptcy filing ended many years ago. The challenge today is to make sure that you do not get taken advantage of as you rebuild your credit after you file bankruptcy.

Richard West is a Board Certified Consumer Bankruptcy attorney in the Cincinnati and Dayton Ohio Area in the law firm of West Hurley & Malkiewicz. The firm limits its practice to consumer bankruptcy representation. See http://debtfreeohio.com for more information about credit after bankruptcy.