One of the biggest concerns that my clients have is whether or not they will be able to have a credit card after they file bankruptcy. Credit cards have become such a big part of our culture, it is hard to imagine life without one. Yet, credit cards account for some of the biggest debt that my clients discharge in bankruptcy.
I remind my clients that bankruptcy is an opportunity to start over and re-prioritize. By freeing yourself from the burden of credit cards, you will be able to focus on your new beginning and stop worrying about how to meet your debt obligations.
The fact remains, though, that credit cards are almost a necessity. It can be impossible to travel without one, especially if you need to rent a car or rent a hotel room. One option, of course, is to get a debit card from your bank that is connected to your checking account.
Another option is a secured credit card. A secured credit card is guaranteed by a savings account, money market or certificate of deposit. The credit limit will be tied to the amount in the savings account and is somewhere between 50-100% of the deposit required. So if you were asked to deposit $500, your credit limit would probably be between $250 and $500. If you default on your monthly payments, the bank will withdraw the funds owed from the account that secures the card.
One upside to the secured credit card is that, if the lender reports it to the credit reporting agency, it will help you re-establish your credit ranking.
Like any other credit card, you should be on the look out for fees. Read the fine print. Make sure you’re not exchanging the lure of a credit card for extra expenses. Remember that the reason you filed bankruptcy in the first place was to get a new start. Ask yourself if getting a credit card is going to help you with that. Consider whether or not a debit card won’t do what you need.
If you have questions or concerns about how personal bankruptcy will affect your credit score, we hope you’ll come in for a free, no-obligation consultation with an experienced bankruptcy lawyer. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.
