Effects on Credit


Most bankruptcy clients promise themselves that they will never again have or use a credit card. Some, however, consider keeping at least one of their old cards for convenience or emergencies after their bankruptcy is over. In fact, there is usually no reason for you to retain any of your old credit cards through your bankruptcy.

Most people receive unsolicited credit cards soon after they file bankruptcy. Bankruptcy debtors receive new credit cards because they are a better credit risk after wiping out their debts in bankruptcy than they were when they owed money to many creditors. Also, bankruptcy clients cannot file against newly issued credit cards for eight years in a Chapter 7. For most people, bankruptcy makes it easier, not harder, to get new credit cards.

As soon as you receive your bankruptcy discharge, you will be able to qualify for some basic consumer loans, although at a higher interest rate. The good news is most lenders state that it takes no more than two years to reestablish a normal credit rating provided you pay debts currently and make sufficient income. Within two years after receiving aChapter 7 discharge, most people are able to purchase cars and homes with normal interest rates and terms.

At one time, bankruptcy destroyed peoples’ credit. Banks used to believe personal bankruptcy was a stigma on credit that a debtor could not overcome. Today, so many people file bankruptcy every year that banks cannot ignore this large market of potential customers. As a result, banks are much more lenient toward people forced into bankruptcy. While no one plans to file bankruptcy, the effect of filing today is not nearly as bad as your creditors would like you to believe.

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