Credit Card Bankruptcy Guide - How to Avoid it, What Bankruptcy Credit Cards are Available?

Info_lover | Jun 17, 2010 |

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With consumerism being on the rise, an increasing number of people are filing credit card bankruptcy. Now you may find that it is rather unusual to come across people who are struggling to pay off these monthly credit card bills. This is because most of these people, who are in serious debt, did not understand the concept behind credit cards in the first place. In the past 10 years, the number of people declaring bankruptcy is increasing rapidly. Credit card debt is the common factor which has pushed many people towards insolvency.

Tips to Avoid Credit Card Bankruptcy

You must avoid credit card debt bankruptcy if you want to make your path to financial revival smooth and with minimal hardships. There are several debt relief programs that you can choose amongst to legally eliminate credit card debt without bankruptcy. In the world we live in today, your credibility is ultimately linked to your credit report. You will be denied or allowed access to credit by financial institutions, depending on how clean your credit report is. If your credit report is tarnished, you may also be denied employment opportunities. If you need some tips to avoid credit card bankruptcy, the best recommendation I could give you is to go for credit counseling, debt management plan, debt consolidation or debt settlement. All of these methods will help to eliminate credit debts.

How to Get Credit Card after Bankruptcy

In the event that you have no choice but to declare credit cards bankruptcy due to excessive credit card debt, you can still rebuild your credit by applying for those credit cards for bankruptcy. The only problem you would face is trying to get that first card. When you know the different types of post-bankruptcy credit cards that you can apply for, you will be able to rebuild your credit more easily.

1. Step 1

For starters, you have to find a credit card lender which specializes in issuing out bankruptcy credit cards. The increased competition in the credit market has forced financial lenders to focus on bankruptcy credit cards.

2. Step 2

You can choose between an unsecured credit card and a secured credit card. Secured credit cards are widely regarded to be the best credit card after bankruptcy and they are backed by a savings account which you open with the financial institution to use as security collateral for the credit card. An unsecured credit card works the other way round.

Unsecured credit card after bankruptcy, works in the same manner as that of a traditional credit card, but the cost of borrowing is far higher than normal. The lender will report to the 3 leading credit reference agencies (Equifax, Experian and TransUnion) every month. While missed or late payments will not help the borrower's cause, making a series of prompt repayments will gradually help to improve credit scores. That said, borrowers tend to turn to pre-paid or secured poor credit cards as unsecured cards usually have much higher charges and handling fees.

A secured credit card typically requires you to pledge a property as collateral in order to be granted a credit limit. Most of those people, who sign up for such a post bankruptcy credit card, will usually be granted a far higher limit due to the minimal risk faced by the lender. It also means that unlike the application process for an unsecured credit card for bankruptcy, approval is more or less guaranteed.

3. Step 3

You will need to fill out all the necessary paperwork to apply for the credit card.

4. Step 4

The most important thing you have to do is to make timely repayments so as to rebuild your credit. It is only normal to see a low credit rating after filing for credit card bankruptcy. When you rebuild your credit rating with credit cards after bankruptcy, you can be on a great start to a new and better financial future.