How Long After You File for a Chapter 7 Bankruptcy Can You Get a Credit Card?
Filing for bankruptcy can be both a relief and a worry. While the debts that kept you awake at night are history, knowing that establishing credit after your bankruptcy will be an uphill battle is also worrisome. Getting a credit card to help restore your credit is a good idea, but how soon you can get one after bankruptcy often depends on your situation.
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Chapter 7 Bankruptcy
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Chapter 7 bankruptcy, also known as liquidation bankruptcy, is often the last resort of debtors saddled with unsecured debt like credit card accounts or payday loans. Assets such as homes or cars, if available, are sold to satisfy creditors, and the remaining debt is discharged. The length of a Chapter 7 bankruptcy is dependent upon the individual's situation, but the bankruptcy remains on the debtor's credit history for 10 years.
Discharge
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A bankruptcy is not complete until the bankruptcy court is satisfied that all the court's orders have been followed. During the period of the bankruptcy, the court may prevent you from establishing new credit -- and subsequently, new debt. When all debts pertaining to the bankruptcy have been discharged, debtors receive an official notice from the court, called a "Discharge of Debtor." Often, creditors will ask to see your discharge notice before extending you new credit.
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Credit Cards
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After your discharge is complete, it's time to begin rebuilding your credit. With a bankruptcy noted on your credit history, finding a credit card with attractive features may mean waiting until you can prove yourself credit worthy again.
A secured card is often the post-bankruptcy consumer's first foray into credit cards. Secured cards, which are collateralized by a savings account holding the credit line, allow you to re-establish credit while offering the credit card company the money to cover your charges in case you fail to pay the card off.
Before getting a secured card, talk to the institution or credit card company about the possibility of your card being migrated to an unsecured card after a suitable period in which you pay your monthly bill regularly. Also, beware of cards with high upfront fees that eat into your available balance.
Consider Your Credit Card Use
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If you re-establish your credit by using a secured credit card, before long offers for unsecured cards will begin to roll in. Getting at least one unsecured card is a good idea for emergencies and for travel, but before you begin opening up credit card accounts with abandon, it's a good idea to consider how you intend to use the cards, and why you filed bankruptcy in the first place.
Ideally, pay the balance on a credit card in full each month. While that's not always possible, if you are using a credit card because you are running short on cash every month, or because you simply wish to buy things you cannot afford, it won't be long until your debts begin to mount again.
Consulting a credit counselor can help you learn to budget, learn to use credit, set financial goals and avoid the financial pitfalls that led you to bankruptcy.
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References
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