1. Home
2. Bankruptcy Articles
3. Credit After Bankruptcy

FAQ'S

Saturday, September 3rd, 2005

by Theodore Sliwinski, Esq.

Covered in this Article:

• Can a person ever get credit again after they file for Bankruptcy?
• Can a debtor retain any of their credit cards?
• Will I be able to keep my credit cards or obtain credit after bankruptcy?
• Can I get another a credit card after filing for bankruptcy?
• When can a debtor apply for credit again?

1. Can a person ever get credit again after he files for bankruptcy?

Yes! A number of banks now offer “secured” credit cards wherein a debtor puts up a certain amount of money (as little as $200) in an account at the bank to guarantee payment. Usually the credit limit is equal to the security given and is increased as the debtor proves his or her ability to pay the debt.

Two years after a bankruptcy discharge most debtors are eligible to qualify for mortgage loans on favorable terms. These terms are as good as other New Jersey-ites who already have decent credit. The size of your down payment and the stability of your income will be much more important than the fact you filed bankruptcy in the past. The fact that you have filed bankruptcy stays on your credit report for 10 years. It becomes less significant the further in the past the bankruptcy is. The plain truth is that you are probably a better credit risk after bankruptcy than before.

2. Can a debtor retain any of their credit cards?

Whether a debtor keeps credit cards after filing bankruptcy is up to the credit card company. If you are discharging a credit card then the credit card company will cancel the credit card unless you reaffirm their debt. Even if you have a zero balance the credit card company might cancel the card.

3.  Will I be able to keep my credit cards or obtain credit after bankruptcy?

After listing all credit cards in your bankruptcy, in most cases you can ultimately reaffirm one or two if you agree to repay the amount that was owed. Whether you want to do that or not is sometimes questionable, however, since those are the debts that you were trying to get rid of to begin with. However, there are several ways to obtain credit after bankruptcy. One way is to reaffirm a debt, as previously discussed. Also, some banks are now offering a secured credit card. In a secured credit card your credit limit is based upon the amount of money that they are holding in their bank, to potentially offset your debt against the money that they are holding.

As to your future credit, many creditors are more likely to extend you credit after you file for bankruptcy than before your filed. The reason behind this is because with all of your dischargeable debts now wiped away, you would now have more disposable income to pay the new debts. Moreover,  the credit car companies and other lenders fully are cognizant that the debtor can’t file for bankruptcy for another eight years.

4. Can I obtain another a credit card after I have filed for bankruptcy?

Yes, there are several options available. While technically not a credit card you could use a bank or debit card to perform activities for which you normally would use a credit card. You also may be able to keep the credit card you already have if the creditor grants approval. If these options do not work you can get secured credit card which is backed by your own bank account.

5. When can a debtor apply for credit again?

The decision whether to grant you credit in the future is strictly up to the creditor and varies from creditor to creditor. There is no law that prevents anyone from extending credit to you immediately after the filing for. However, the credit card companies are not legally required to offer you a new credit card after you file.