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Credit Cards After Bankruptcy: What Is The Truth
Credit Cards After Bankruptcy: What Is The Truth
A bankruptcy is a serious affair that has long term
consequences. Frequently the record of a bankruptcy will
remain on a credit report for at least 10 years. The discharge of
all your debts by the bankruptcy court does bring a great
sense of relief to many people.
Shortly after you have received your discharge the record of
you bankruptcy will be available to the public. Bankruptcy
listing companies will take this information and sell it to many
different entities including financial institutions and credit card
companies. These companies will in turn start sending you
credit card offers each week for at least a year.
Acquiring credit cards after bankruptcy is relatively easy.
However most of the offers received in the mail are nothing
short of scams. If you carefully read the credit card agreement
carefully you will find that there are many pit falls that will
quickly cause financial problems.
Credit cards are bad business for most people to begin with.
Credit card companies made more than 90 billion dollars yes
billion dollars on fees and penalties last year alone. Most of
these fees are paid by people who cannot afford them. It is
common knowledge that most divorces are the result of
money problems and the number one cause of money
problems comes from the use or misuse of credit cards.
If you have had a recent debt discharge by the court you
should already know what caused you to get into debt in the
first place. In most cases you have worked with a credit
counselor during the bankruptcy process. The first piece of
advice these companies provide is to cut up your credit cards.
After bankruptcy you should be living on a cash basis and the
zero budget process. It is very important to stay on course and
not repeat your mistakes by using credit cards. Failure to do
so is a direct route back to financial ruin. If you must use
plastic money then apply for a debit or bank check card. Even
this will cause you to spend more than you would if your used
cash.
Studies have shown that using cash causes an individual to
spend between 15 and 18 percent less than when using
plastic money to pay for groceries. Spending cash causes
psychological pain that keeps people from over spending. In
addition people who use debit cards to make purchases
spend about 10 to 12 percent less than those who use credit
cards. Using credit cards after bankruptcy is a fast track to a
second bankruptcty.
If you must have a credit card after bankruptcy you should
only consider a secured card. Basically you must deposit
money into an account that provides equity for the card. Your
card limit is the same as the amount you have deposited into
the equity account. If you default and do not make the monthly
payments then the equity is use to pay the debt.
Do not fall into the trap of thinking you must have a credit card
to rebuild your credit rating after a bankruptcy. This is just
another ploy by credit card companies to get you to sign the
credit card agreement. Just say no and stick to a cash basis.
Careful checking of the agreement will reveal that the
company can raise your interest rate to as much as 31 percent
without real cause. Credit card companies have in many
places replaced the mafia as the local loan shark. Credit cards
after bankruptcy just do not make any sense.
Credit Cards After Bankruptcy
consequences. Frequently the record of a bankruptcy will
remain on a credit report for at least 10 years. The discharge of
all your debts by the bankruptcy court does bring a great
sense of relief to many people.
Shortly after you have received your discharge the record of
you bankruptcy will be available to the public. Bankruptcy
listing companies will take this information and sell it to many
different entities including financial institutions and credit card
companies. These companies will in turn start sending you
credit card offers each week for at least a year.
Acquiring credit cards after bankruptcy is relatively easy.
However most of the offers received in the mail are nothing
short of scams. If you carefully read the credit card agreement
carefully you will find that there are many pit falls that will
quickly cause financial problems.
Credit cards are bad business for most people to begin with.
Credit card companies made more than 90 billion dollars yes
billion dollars on fees and penalties last year alone. Most of
these fees are paid by people who cannot afford them. It is
common knowledge that most divorces are the result of
money problems and the number one cause of money
problems comes from the use or misuse of credit cards.
If you have had a recent debt discharge by the court you
should already know what caused you to get into debt in the
first place. In most cases you have worked with a credit
counselor during the bankruptcy process. The first piece of
advice these companies provide is to cut up your credit cards.
After bankruptcy you should be living on a cash basis and the
zero budget process. It is very important to stay on course and
not repeat your mistakes by using credit cards. Failure to do
so is a direct route back to financial ruin. If you must use
plastic money then apply for a debit or bank check card. Even
this will cause you to spend more than you would if your used
cash.
Studies have shown that using cash causes an individual to
spend between 15 and 18 percent less than when using
plastic money to pay for groceries. Spending cash causes
psychological pain that keeps people from over spending. In
addition people who use debit cards to make purchases
spend about 10 to 12 percent less than those who use credit
cards. Using credit cards after bankruptcy is a fast track to a
second bankruptcty.
If you must have a credit card after bankruptcy you should
only consider a secured card. Basically you must deposit
money into an account that provides equity for the card. Your
card limit is the same as the amount you have deposited into
the equity account. If you default and do not make the monthly
payments then the equity is use to pay the debt.
Do not fall into the trap of thinking you must have a credit card
to rebuild your credit rating after a bankruptcy. This is just
another ploy by credit card companies to get you to sign the
credit card agreement. Just say no and stick to a cash basis.
Careful checking of the agreement will reveal that the
company can raise your interest rate to as much as 31 percent
without real cause. Credit card companies have in many
places replaced the mafia as the local loan shark. Credit cards
after bankruptcy just do not make any sense.
Credit Cards After Bankruptcy
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