Should You Get a Credit Card after Bankruptcy?
When you file for bankruptcy, you probably assume that your credit score has been permanently shredded and that you’ll never qualify for a car loan or a credit card again. As many of our clients discover, however, this couldn’t be farther from the truth. Some of them are shocked to find out they have been pre-approved for cards only a couple years after filing for bankruptcy protection.
But just because you qualify for a card, should you get one? This is a separate question, and there is no answer that applies to everyone. Instead, take a careful look at your circumstances.
Did You File for Bankruptcy Because of Credit Card Debt?
Some people filed because a medical emergency led to high medical bills and lost income. Other people lost their jobs and struggled to find equivalent work. But let’s be honest—some people file for bankruptcy because they blew money, racking up large charges on credit cards. Was most of your debt incurred during a blowout trip to Vegas?
If this describes you, then think carefully if you are disciplined enough in your spending. If you suspect you will use credit cards to pay for a lifestyle you can’t afford, you might want to hold off. Stick to paying with cash and sticking to a budget. Use extra money to fund an emergency account and to save for your retirement. You can get a card when you feel confident that you have established good financial habits.
Do You Want to Improve Your Credit Faster?
You might be thinking of buying a home or a new car in a few years and realize you’ll need a loan. (Yes, it’s possible after filing for bankruptcy). However, you also realize you need a stronger credit history. If so, then getting a credit card is one way to repair your credit.
Remember not to make outlandish purchases and always pay off your balance at the end of each month so that you do not incur interest. If you use your card responsibly, then you should see a slow and steady uptick in your credit score.
Is Carrying Cash Inconvenient?
Credit cards are definitely convenient. Carrying large amounts of cash, by contrast, makes you vulnerable to theft. Also, using a credit card can provide protection in the event of fraud.
If convenience is what you are after, you can start out with a secured credit card. You deposit a sum of money—say $500—and this represents the credit limit on the card. Still, secured cards are typically accepted wherever credit cards are and can provide the flexibility and convenience you desire.
In a Cash Crunch? Let’s Talk about Bankruptcy
Nowack & Olson is a leading South Florida bankruptcy law firm with thousands of satisfied clients across Miami, Jupiter, and Plantation.
If you are just starting to feel financial distress, we can talk to you about your options. Please give our Plantation bankruptcy attorneys a call at 888-813-4737 or send us an online message. The sooner we meet, the more options you will have for digging your way out of debt.
Resource:
nerdwallet.com/article/credit-cards/secured-credit-cards-vs-unsecured-difference
https://www.floridabankruptcynow.com/job-losses-related-to-bankruptcy-are-rising/