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Using credit cards after bankruptcy

Many Kentucky residents wonder if they can continue to use a credit card after they file for bankruptcy. In the case of a Chapter 7 bankruptcy, there are no restrictions so it is entirely possible to use a new card immediately upon receipt. In the case of a Chapter 13 bankruptcy, any new credit must be approved by the trustee overseeing the bankruptcy case. It may be possible to get new credit after that approval.

The problem with filing bankruptcy and credit has more to do with gaining new credit than with any problems using it. A bankruptcy impacts a credit report directly for at least two years and remains on the report for 10 years. This can cause the consumer serious hardship when it comes to gaining new credit, which is ironically the best way to repair the damaged credit score. Most credit card deals offered to those who have filed bankruptcy are unattractive, with high interest rates and fees and low limits.

The best way to go about repairing and using credit after a bankruptcy is to have a solid budget and financial plan. Most creditors will offer a secured card to just about anyone because there is basically no risk to the issuer. These secured cards can be an excellent way to repair credit and begin developing a repayment history that will open up more options in the future.

Credit card debt can often become overwhelming, and a consumer burdened with this type of financial obligation may wonder if filing for bankruptcy is a suitable form of debt relief. There are certain income and other restrictions and requirements associated with a Chapter 7 filing that an attorney can explain.

Source: FOX Business, "Can I Use My Credit Card After Bankruptcy?", Erica Sandberg, April 02, 2014

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