Bankruptcy is a legal word that refers to a situation in which a business or a person is unable to pay their existing obligations after liquidating all of their assets. Bankruptcy discharges the majority of debts, bringing relief. To file for bankruptcy, you must retain the services of a bankruptcy lawyer who will provide legal counsel and draft court filings. A competent bankruptcy attorney guarantees that you have access to bankruptcy court.
As with any other aspect of life, there are advantages and disadvantages of filing bankruptcy. As a benefit, bankruptcy provides a simpler way to resolve defaults and litigation from creditors you are unable to pay. Additionally, it provides a second opportunity for individuals and organizations facing repossessions and missing debt payments. Filing for bankruptcy allows you to start over financially and protects you from losing all of your assets in debt settlement.
However, all types of bankruptcies have a detrimental effect on your credit. After being declared bankrupt, you will need to work very hard to improve your credit score. People with active bankruptcies may be unable to get a loan owing to their low credit ratings. Bankruptcy does not always eliminate all debts.
Filing for bankruptcy is a stressful experience to say the least, and picking up the pieces afterwards can prove to be even more challenging. This type of situation can take a heavy toll on both your personal and work life, which is enough to think about without worrying about repairing your finances.
Filing for bankruptcy also leaves you in a tricky place with creditors. One question on many people’s minds after filing for bankruptcy is whether or not they will ever be approved for a credit card again.
While your credit takes a hit after bankruptcy, you still have options. There is a wide range of credit card products available for a wide range of financial situations. Some products are made for people with fantastic credit, and others are for those who might have no credit or bad credit.
Before applying for a credit card again, you need to know what your credit score is following your legal proceedings. There a few different places you can go to find your new credit score, however most banks and creditors rely on the FICO model so you might want to consider this one.
Don’t panic if you have a relatively low credit score. Bankruptcy brings down your credit score significantly, but it is not the only thing that matters.
With chapter 7 bankruptcy, you do not have to use your income to pay back debts, and some of your debts will be forgiven. This puts you in a better position with creditors, so your chances of being approved are not all lost.
The next step is to shop around for the best credit card product for your specific situation. You’re going to want to look at products that are available to people with a poor credit score. A secured credit card is probably your best bet, in which you put money into a separate account so that creditors can take from this fund should you not pay off your credit card bill. While this does require money up front, as long as you pay your bill on time, your money will not be touched.
If you get turned down for one credit card, apply for another, less ambitious one, or try waiting a little while to put some distance between you and your bankruptcy notice.