Once you’ve filed for bankruptcy, it becomes a new starting point in your financial life. Bankruptcy brings you some relief from your debt but at the same time it ruins your credit.
To recover from bankruptcy, you need to rebuild credit, and credit cards may come in really handy here. They are reported to credit bureaus allowing you to prove your ability to manage credit in a responsible way. Just remember to make all payments on time and don’t max out your credit limit.
Bankruptcy grades and available credit cards
Bankruptcy has a long-lasting negative effect on your credit history, and therefore, considered to be one of the most serious credit damages. For example, if you file for Chapter 13 bankruptcy, this record stays on your credit report for seven years. And it takes ten years to clear up your credit history if you file for Chapter 7 bankruptcy.
However, the effect bankruptcy has on your credit is diminishing as time passes by. And you may find more and more credit cards available to you at each further phase of bankruptcy:
- When a bankruptcy has a pending status, it is being proceeded by the court. This is rather the only situation when you may hardly qualify for any credit card.
- Once the court has completed the consideration of the case, you receive a debt repayment plan, and your bankruptcy is resolved. Already at this level, there are a few decent credit cards available to you, so you can start rebuilding your credit right away. For example, you may consider secured credit cards such as the OpenSky® Secured Visa® Credit Card with a $35 annual fee, the primor® Secured Visa Classic Card with an annual fee of $39, and the Merrick Bank Secured Credit Card with a $36 annual fee. You may qualify even for an unsecured card – the Platinum Credit Card from Capital One with a $0 annual fee.
- After you have repaid your debt, your bankruptcy is discharged. This normally takes from several months to five years but time here plays to your advantage. For example, to qualify for the Citi® Secured MasterCard®, you should have no bankruptcy records in the past two years. And this card is already a good $0 annual fee offer from one of the leading US banks.
- In 7-10 years after the bankruptcy record was made, it is removed from your credit report. Starting from this point, you may qualify for any card requiring a no bankruptcy credit history.
See your bankruptcy as a process with different phases not a total failure. This helps take it under control, find available credit card options, and start rebuilding your credit.