One of the biggest myths when it comes to filing for bankruptcy is that doing so will completely destroy your financial future. This is simply not true. That said, you can expect some negative consequences on your credit report for a minimum of seven years. Given these considerations, you may wonder if you can apply for a credit card after bankruptcy. The short answer is yes, but there are several variables that can play into the details, as a bankruptcy lawyer, like from Chorches Bankruptcy Law, can explain. Here are four things you should know.
- You Will Have to Wait
Rebuilding your credit following a discharge can be a great idea because it can open up further financial opportunities in the future. Even so, you will still have to wait awhile before you are eligible to apply for a new credit card. How long that takes can depend on:
- Which chapter of bankruptcy you decide to file
- The status of your application and discharge
- How much effort you are willing to put into rebuilding credit
- Discharge Time Can Vary
When you file for Chapter 7, you can expect the court to eliminate most of your unsecured debts as long as you receive a discharge. With this form of bankruptcy, discharges typically take four to six months. While that might seem like a long time to some people, the wait with Chapter 13 will take longer. Unlike Chapter 7, consumers restructure and repay debts under a Chapter 13 plan. An upside to this is the fact that there is the option to keep most assets. The downside, however, is that it can take three to five years before you receive a discharge.
- You Will Only Be Eligible for Some Cards
After the court clears your bankruptcy, you will be eligible to apply for a new credit card, but it will probably be different from the first time you applied. Because bankruptcies remain on credit histories for several years, there are many card companies that will deny an application for credit immediately after. The good news is, there are still options. A secured card can be one way to rebuild.
- You Will Have to Actively Participate
Filing for bankruptcy can alleviate a load of debt, but rebuilding your credit to where you will be eligible for unsecured cards with low interest rates can take some work. A discharge can offer the perfect opportunity for building a smart financial future. Start by making a plan to spend wisely and pay back on time.
Contrary to popular belief, bankruptcy does not disqualify you from having a future credit card. Nonetheless, it will require some patience and effort before you can expect to see better offers.