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Should you apply for credit after bankruptcy?

On Behalf of | Sep 25, 2021 | Bankruptcy

Many consumers who go through bankruptcy have a natural fear of winding up head-over-heels in debt again. They may be so keen to avoid a debt overload that they fear even applying for a single credit card.

After all, for many debtors, it was those plastic cards with the seemingly low (at least at first) interest rates that got them into the situation where they could no longer cover what they owed. It’s understandable to be reluctant to agree to take on more debt of the type they’ve just shed.

Establishing new credit is part of the process

Unless you never again plan to finance a vehicle or take out a mortgage when you purchase a home, you are at some point going to want a positive credit history. After a Chapter 7 bankruptcy, the only way to prove that you learned your lesson about debt and raise your credit score is to incur debt and pay it off responsibly.

That means applying for a post-bankruptcy credit card. At first, all that may be available to you is a secured credit card. This could even be a better option than choosing an unsecured card with higher interest rates and exorbitant annual fees. At least with a secured card, both the credit card company and you are assured you will meet your fiscal obligations.

Put your education to good use

As part of the bankruptcy process, you will have been required to attend some type of credit counseling. Do more than just checking off another box of things to do in order to have your debts discharged. Use the debt strategies and tips you learned to avoid another bankruptcy and help you become financially stable.

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