Peter R. Scribner, Esq. ATTORNEY AT LAW
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Why are credit cards necessary after bankruptcy?

Filing for bankruptcy often feels like a massive defeat because you cannot solve your outstanding debts by yourself. You have to use bankruptcy as a way to alleviate the stress of creditors and credit cards bills piling up at your door.

But bankruptcy is not a defeat rather a great first step in rebuilding your credit score and bringing stability to your finances. Once you finally pay off your debts, you should reconsider incorporate credit cards back into your life in a responsible manner.

What to know about bankruptcy and credit

Before you bring credit cards back into your budget, you need to know when you should apply for a credit card after bankruptcy. There is a specific amount of time where your credit is frozen after filing.

For chapter 7 participants, you have to liquidate all your assets to pay back your creditors. After your debt is discharged, the court will file your case, typically around three months after filing. Once it is processed, you start rebuilding your credit.

For chapter 13 participants, you develop a schedule over three to five years to pay back your creditors. After that period, you will discharge from bankruptcy and begin to rebuild your credit.

Filers should not be surprised if they see a slight increase in their credit score after they discharge. If you find the right credit card, you may see more significant improvements with a year of filing for bankruptcy.

What to look for in a card

While rebuilding credit through cards is crucial, not all credit cards are created equal. Many credit card companies will approach you after discharge with offers of low-interest rates and high rewards.

Instead of being overwhelmed, you need to consider what you should look for in a credit card and what your future financial goals are. Go through each card and analyze their current fees, their interest rates, any rewards offer and how it fits into your credit mix - a personal combination of different credit accounts.

Once you find the right card, take time to apply and work up to a higher credit limit over a more extended period. You do not need to $5,000 limit right away, so start with $1,000 and make small purchases over time.

Your main focus should be to make payments on time and in full. If you can complete that, you may want to discuss with a financial advisor about what are the next steps to improve your economic status.

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Peter R. Scribner, Esq.
1110 Park Avenue
Rochester, New York 14610

Phone: 585-800-9616
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