Does It Have Anything To Do With The Type Of Bankruptcy
Personal bankruptcies cover two broad categories:
Chapter 7 bankruptcy provides you a new start since after the bankruptcy is discharged or finished, you will no longer be liable to creditors, but your credit score will be substantially impacted.
A Las Vegas Chapter 7 attorney can help you with your Chapter 7 bankruptcy and suggest when to apply for a new credit card.
Your debts are reconstructed in this form of bankruptcy, which means that you and your creditors settle on how much of the debt you will return over a three- to five-year period. Any leftover balance on your indebtedness is discharged.;;Las Vegas Chapter 13 bankruptcy attorneys and law firms, will tell you that while this kind of bankruptcy is less detrimental to your credit, it still has a significant impact.
Traditional Or Prime Insured Mortgage:
To qualify for a traditional mortgage, which may give you the best rate, you must meet the following requirements:
- have been discharged from bankruptcy for at least;two years and one day
- have at least;one year;of re-established credit showing on;two;credit items usually with a minimum combined credit amount of between $2,500-$3,000
- have a minimum down payment of 5% for the first $500,000 of your purchase, 10% for any amount over $500,000
- if your down payment is less then 20% down you must have mortgage insurance available through Canada Mortgage and Housing Corporation
- your minimum LTV is 95%
- your maximum TDS is 44%
What Is The Best Credit Card After Chapter 7
After youâve filed bankruptcy, you might have some difficulty qualifying for a credit card. But, there are credit cards available that, with responsible use, can help you start rebuilding your credit score. CardRatings experts select the Credit One BankÂ® Platinum VisaÂ® for Rebuilding Credit as the best credit card after Chapter 7 bankruptcy because it is one of the only unsecured credit cards available for people who are rebuilding credit. Most of the options available are secured and require a security deposit of at least $200.
This card also comes with a cash-back rewards program based on your creditworthiness. You could earn 1% cash back on eligible gas, grocery and telecommunication purchases, which include internet, cellphone, cable and satellite TV services. It is rare for credit cards offered after bankruptcy, to include any type of rewards program.
Although this card is the best for people who have filed bankruptcy and are rebuilding credit, one of the other secured credit cards available might be a better fit, especially if youâre willing to put down a security deposit. The best credit cards after bankruptcy are those that report your account activity to the three major credit cards so you can begin to rebuild your credit and have the fewest fees.
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Here’s How Soon After Bankruptcy You Can Get A Credit Card:
- Secured credit card: After bankruptcy discharged
These cards require a refundable security deposit, usually at least $200, which doubles as your credit limit. Because you’re putting up your own money, your approval chances are high.
The Discover it Secured Credit Card does not reject applicants for having a Chapter 7 bankruptcy on their credit history. And the Capital One Secured’s only bankruptcy requirement is that the case must be fully discharged. Some cards, like OpenSky, don’t even check your credit report when you apply, so they’re great for post-bankruptcy credit improvement.
- Unsecured credit cards for bad credit: After bankruptcy discharged
One example is the . Credit One Bank says a discharged bankruptcy won’t hurt your approval chances, but could lead to a lower credit limit and a higher annual fee.
If a friend or family member makes you an authorized user on their credit card account, that account will be added to your credit reports, and you’ll benefit if the main account holder pays the bill on time every month. If your friend or relative allows it, you will also get a card with your name on it to use for purchases.
In addition to finding the right credit card with which to begin rebuilding your credit, you should review your credit reports for errors and monitor your credit score moving forward. You definitely don’t want the problems that led to bankruptcy to repeat themselves.
7 Tips For Rebuilding Credit After Bankruptcy
Discover It Secured Credit Card
The Discover it® Secured Credit Card;is our top recommendation among bankruptcy credit cards due to the limited fees youll face and the rewards you can earn. This card doesnt charge an annual fee, nor does it charge foreign transaction fees. Youll also avoid late fees on your first late payment , and youll receive a free access to your FICO score on your monthly credit card statement each month.
In terms of rewards, this card doles out 2 percent cash back on up to $1,000 in combined spending at gas stations and restaurants each quarter , as well as 1 percent back on all other purchases. Discover will also match all the rewards you earn after the first year.
Check Your Credit Report To Ensure Your Bankruptcy Is Accurately Recorded
Bankruptcy seriously damages your credit report, but there can be errors that make it worse than it actually is. For example, debt shown as active or late instead of discharged might harm your credit report.
Be sure to review your after bankruptcy. If you spot an error, dispute it as soon as possible. Lexington Law can often help you to work to remove bankruptcy related items from your credit report.
Many consumers find unfair credit reporting and outright inaccuracies. Be aware that your old bankruptcy shouldnt linger on your report after seven years or 10 years have passed.
Talk To A Bankruptcy Lawyer
Need professional help? Start here.
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What If I Need A Loan Or Credit Card Immediately After Bankruptcy
Luckily, most mortgage companies provide FHA loans for scores of 560-600. Traditional financing options often require a score of 600 or higher.
There are options for buying high-cost necessities after filing bankruptcy claims. Secured credit cards and loans exist for those facing bankruptcy. You can look into credit builder loans or other financing options specially built for people after bankruptcy.
Avoid Unsecured Credit Cards After Bankruptcy
There are a handful of unsecured credit cards aimed at consumers with bad credit, such as the . The majority of these cards come with very low credit limits, high APRs of between 25% and 29.99%, and annual fees that can easily exceed $100 a year. Some also have a one-time processing fee to open the account and monthly servicing fees on top of the annual fee. In short, you pay a lot for the privilege of avoiding a security deposit.
Similarly, store credit cards also have lower qualification standards, so a bankruptcy may not disqualify you. But these, too, come with low limits and high APRs, and usually have limitations on where they can be used.
Because of their fees, unsecured credit cards for bad credit typically are more expensive than secured cards. There are plenty of secured cards that dont charge annual fees, and you can get your security deposit returned as long as you pay your balances off in full every month. But with these unsecured cards, the fees you pay wont be returned.
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What Happens If I Miss A Payment
If you miss a payment, well disable your Credit Builder card and ask you to pay your overdue balance. See How and when do I pay off the card? on how to make a payment.;;
If your balance due isnt paid in full after 30 days, we may report information about your account to the major credit bureaus. Late payments, missed payments, or other defaults on your account may be reflected on your credit report.4
Talking To Your Employer
If you have to list that company credit card, you need to talk with your employer before filing for bankruptcy. This isn’t something you want your accounting or HR employees or your boss to find out when they get a notice from the lender or from the bankruptcy court.
The thought of having to sit down with an employer and admit that youre going to declare bankruptcy can be intimidating. Keep in mind that it’s illegal to discriminate against a person for filing a bankruptcy case.
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Evaluating Credit Card Offers
You will typically begin to receive new offers for credit after bankruptcy. However, be aware that many new credit card offers will have low limits, high-interest rates, and high annual fees. Reviewing the offer terms carefully before signing up for a new credit card after bankruptcy is essential. The goal is to accept a credit card with the highest possible limit because credit reporting agencies rate you based on your total available credit. Not only can lower limits can harm your score, but you’ll want to pay off the majority of your balance each month.
If you don’t qualify for a typical, unsecured credit card, you might want to start rebuilding your credit by getting a secured credit card from your bank. You’ll deposit a certain amount of money in the bank as collateral for the card. In exchange, you have a line of credit equal to the amount in the account. A secured credit card rebuilds credit because the creditor typically reports payments on your credit reportyou’ll want to be sure that will happen.
The Type Of Bankruptcy Counts
There are two basic types of personal bankruptcies:
- Chapter 7.;This is where all of your debts are eliminated and any assets you own that arent exempt will be sold off and used towards your debts. This will wipe out what you owe your creditors but also anything you own of any value. Chapter 7 allows for a fresh start, as once the bankruptcy is discharged, or completed, youll no longer have any liability towards creditors, but your credit score will be severely damaged.
- Chapter 13. With this type of bankruptcy, your debts are restructured, which means that you and the creditor come to an agreement over how much of the debt you will repay within a time frame of three to five years.;Any remaining portion of your debt is forgiven. Although this type of bankruptcy is less damaging to your credit, it still has a strong negative effect.
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Compare Credit Cards After Bankruptcy
If you have heavy doubt whether your credit score will qualify, look into the cards from OpenSky and Green Dot. While they have annual fees, theyre targeted toward consumers with severely damaged credit.
How we selected our top cards
We picked our top cards by comparing several factors across products ideal for bankruptcies, including credit requirements, credit lines, annual fees, APRs, reward opportunities and reporting to the major credit bureaus. Our picks performed above and beyond the others, earning spots on our list.
Alternatives to secured credit cards for building credit
If youre ineligible for a secured credit card or dont want one here are a few alternatives to consider.
- This is a unique type of loan that can help you build your credit while increasing your savings. It often comes with a relatively low-interest rate.
- Store credit cards. While approval is never guaranteed, store credit cards generally have more lenient approval requirements. Do your research before applying for one, understanding eligibility requirements as well as the interest rates and fees youll pay. Check if your store-card provider reports payments to the three major credit bureaus. And above all, spend responsibly and make your card payments on time.
Alternatives to bankruptcy credit cards
How Does A Bankruptcy Affect My Credit Score
But this isnt the only effect you will feel on your credit. Filing for Chapter 7 or Chapter 13 bankruptcy will cause an immediate drop in your credit score in some cases, by hundreds of points. How long the negative effect of a bankruptcy will stay on your credit score depends on the type of bankruptcy case you filed. A chapter 7 filing will remain on your credit score for 10 years from the filing date. A chapter 13 filing, on the other hand, will remain on your score for 7 years.
The good news is, after your discharge the freeze on your ability to apply for credit will end. The bad news is that your credit score will likely prevent you from accessing most traditional credit cards. However, there are some Las Vegas lenders that are eager to you a new card in the mail depending on your income. Thats because given your discharge, you are barred from filing for bankruptcy again for another 7 years. These cards also typically come with a sky-high interest rate and low credit limits.
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Unity Visa Secured Credit Card
This card charges a $39 annual fee, yet you can qualify for an initial credit limit starting at $250 and your payments will be reported to all three credit bureaus. What makes this card stand out is its ongoing interest rate and introductory balance transfer offer, which could be a lifesaver if you need to escape high interest debt.
Once you sign up for the UNITY® Visa Secured Credit Card, youll qualify for a fixed APR of 17.99 percent on purchases. However, balance transfers qualify for an introductory APR of 9.95 percent for six months, followed by the standard fixed interest rate of 17.99 percent. Note that a 3 percent balance transfer fee applies.
Best Unsecured Credit Card After Bankruptcy
Our take: While it carries an annual fee, the Credit One Bank Platinum Visa for Rebuilding Credit offers a simple cash back rewards earning scheme and a chance to rebuild your credit with an unsecured card.
When you have bad credit, particularly with a bankruptcy on your credit report, it can be difficult to get an unsecured card. Those you can qualify for will usually carry a ton of fees and offer little in the way of rewards. But if youre determined to avoid putting down a deposit, the ;is a decent post-bankruptcy option.
To start, the card offers 1% cash back rewards on eligible purchases of gas, groceries and mobile phone, internet, cable and satellite TV services. While this rate is not impressive compared to that of dedicated cash back cards, earning rewards in such practical categories should help you offset the cards annual fee at least a bit.
Additionally, the cards $300 minimum initial credit limit could be eligible for an increase over time, though Credit One does not offer a specific time frame or terms for credit line increases. Youll also get free online access to your Experian credit score and can set up alerts via email and text to ensure you keep up with payments and avoid late fees.
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Learn How To Rebuild Your Credit After Chapter 7 Bankruptcy
Updated By Cara O’Neill, Attorney
Everyone wants to remain debt free after discharging credit card balances, medical bills, and other qualifying debt in Chapter 7 bankruptcy. Enjoy your fresh financial start for years to come by following these tips:
- stay within a budget
- monitor your credit report for errors, and
- learn how to purchase a new car or home relatively shortly after bankruptcy.
If you take control of your finances now, you can be one of the many who prosper following Chapter 7 bankruptcy.
What To Do After Your Bankruptcy Is Discharged
Once your bankruptcy is discharged, you should pull your credit reports from Equifax, Experian and TransUnion to confirm that your lenders are accurately reporting the discharge. Only the debts included in the bankruptcy filing should be reported as discharged. Also, double-check that all of those accounts included in the bankruptcy show a zero balance on your credit reports. After youve confirmed that your credit reports are accurate, you can then consider applying for a new credit card.
Even after your bankruptcy is discharged, it may take a while to qualify for a new credit card. Some credit card companies may reject your application simply because you have a recent bankruptcy on your credit report. Others may be less stringent because your risk of filing for bankruptcy again is low, since there are rules restricting when you can file for a second bankruptcy.
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Loans And Other Credit
After you have been discharged from bankruptcy, there is no legal;waiting-time requirement;that must be met in order to apply for most loans, such as personal loans or car loans. However, lenders will ask for your financial information, including whether you are employed, current debts and assets, in addition to obtaining credit reports which contain information about your credit history and bankruptcy. Therefore, before immediately applying for a loan after being discharged from bankruptcy, it is a good idea to spend some time on repairing your credit, which will increase your chances of getting a loan.;