Before you decide to go through with a bankruptcy filing, you must fully understand that you may experience significant financial limitations in the coming months and years. Importantly, this may go to the extent of no longer being a credit card holder. Well, with that being put into consideration, please continue reading to learn what happens to your credit cards once you file for bankruptcy and how an experienced Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C., can help you recover from this outcome.
What happens to my credit cards when I file for bankruptcy?
It is not talked about enough, but you will likely have to give up all your credit cards once you file for Chapter 7 bankruptcy. Specifically, your credit card companies may cancel them on your behalf. This is because your credit card account essentially serves as a type of contract. So, when your credit card is canceled, so is a valid agreement between you and your credit card company. Therefore, your credit card company can no longer come after you to make you pay off your outstanding debt. After all, protection from such creditor activity is likely why you filed for Chapter 7 bankruptcy in the first place.
While you now understand that this is a positive thing, you may still be confused as to how you will manage to pay for your everyday expenses during your bankruptcy proceedings. Well, you may rest easier knowing that you are still allowed to hold a debit card so payments can be taken directly from your bank account, and you do not incur any further debts. Importantly, this is so long as your appointed bankruptcy trustee rules your bank account as exempt property in your case.
How can I rebuild my credit after my bankruptcy case?
Contrary to what you may initially assume, it may be easier for you to apply for credit cards after your Chapter 7 bankruptcy case than you initially realize. This is because most or all of your debts were likely discharged at the close of your bankruptcy case. And so, credit card companies may reasonably assume that you have enough disposable income and minimal debts to be able to handle the responsibility of a credit card adequately. What’s more, credit card companies know you are required to wait at least eight years before you file for Chapter 7 bankruptcy again, or four years for a Chapter 13 bankruptcy filing. This similarly reduces your posed risk, at least for the foreseeable future.
Once you obtain a new credit card, you must work on rebuilding your credit in the wake of your bankruptcy. For this, you may use your credit card regularly for day-to-day purchases, so long as you keep it below your imposed credit limit. And also, so long as you know you can handle paying it off in full on the imposed due date. If you consistently do this, your credit line may gradually increase. In turn, your credit score will follow suit and rise.
This matter may obviously be important to you, and you may want the best possible outcome. So please, do not fight this without a skilled Rockland County bankruptcy attorney in your corner. The team at The Law Offices of Allen A. Kolber, Esq., P.C. is here at your command.
