Credit cards in the aftermath of bankruptcy

There are likely to be many people among our readers in Tennessee who have heard nothing but the “negative” aspects of filing for bankruptcy: that they’ll lose their home, be humiliated when their friends and family find out, and their credit will take a hit that they won’t be able to recover from. However, these negative aspects are often exaggerated. The fact is that filing for bankruptcy is a legal method of confronting an untenable debt situation, and in many cases the problems are caused by overwhelming credit card debt.

So, once credit card debt has been discharged through a bankruptcy filing, there likely isn’t any chance that the filer will ever get a credit card again, right? Actually, this is usually wrong. As a recent article pointed out, even those who have filed for bankruptcy will likely have an opportunity to begin to rebuild their credit by being approved for credit cards.

Obviously, the options to rebuild credit will depend on the individual consumer who has filed for bankruptcy, but in many cases a secured credit card could be an option post-bankruptcy. The concept is quite simple: the consumer makes a cash deposit with the credit card company, and that amount is mirrored in the card’s credit limit. This ensures that the credit card company is protected in the event a person can’t repay the balance.

As an individual moves away from the successful closure of his or her bankruptcy case and he or she rebuilds his or her credit, he or she will most likely begin to receive the usual credit card offers that millions of Americans consider “junk mail.” So, is bankruptcy the end of one’s financial well-being? No. In fact, a successful bankruptcy can provide the debt-relief needed to find a fresh financial start and get on the road to a strong financial foundation.

Source: Nerdwallet, “Applying for a Credit Card After Bankruptcy,” Kevin Cash, March 17, 2016

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