Develop And Planand Dont Borrow Any More Money
Avoid taking on any new debt at all costs. This is a time to dig yourself out, not make the hole bigger. To come up with a plan to pay back your creditors, meet with a non-profit financial or credit counselor. They may be able to help negotiate smaller payments for your unsecured debt . Talk to your bank to get a reliable reference for an agency that can help, and avoid firms that want to charge you for a percentage of your debt.
Other resources: The National Foundation for Credit Counseling, Financial Counseling Association of America
The Best Credit Cards To Consider After Bankruptcy
Modified date: Jul. 20, 2021
Bankruptcy can destroy your credit but the effects wear off over time. Ive seen how stressful it can be, Ive seen friends going through this process. But Ive also seen how its possible to rebuild credit after bankruptcy.
If youve had to go through bankruptcy, you should look for ways to start rebuilding your credit to show creditors youve turned the corner and now exhibit good credit behavior. One way to do this is by opening a credit card.
Getting approved for credit cards after bankruptcy can be difficult, but it isnt impossible if you know which cards to apply for. Ive put together this list of the best credit cards after bankruptcy to help you start rebuilding your credit when youre ready.
Whats Ahead:
Ive Got Good Credit Why Was I Denied For A Credit Card
Oftentimes you can still be denied for a credit card even though your credit score isnt that bad. This is especially true if your credit score isnt in the mid-700s or better.
What gives?
Banks approval criteria for each card changes all the time. But common reasons you may be denied a credit card, even if you have a good credit score, include:
- Too much debt
- Too much available credit
- Too short of a credit history
- Recent late payments, charge-offs, or other negative items
If your credit score is in the high 600s, you may still get approved for some of the leading card offers, but this is where you have to be careful. Youre more likely to be approved if you have a year or two of on-time payments and very little credit card debt. If your score is lower than 700 because youve missed payments or have a lot of revolving debt, your approval chances are lower.
Dont apply for new credit if you have recent late payments or big balances on your existing credit cards. Even if you pay your cards in full each month, that big balance from the month you went on vacation could look like debt to a banks computers. The best time to apply for a new credit card is when:
- Your current card balances arent too high
- You have not missed a payment in the last two years
- You have not recently applied for other credit
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How I Came Up With This List
I included both secured and unsecured cards in our list to give you options based on your needs. If your credit score hasnt recovered enough to qualify for an unsecured card, a secured card will be easier to qualify for. Plus, they often report on-time payments to credit bureaus, making them perfect for credit building.
I also looked for cards with other features, such as rewards, to give you the widest list of credit card options if youve had a bankruptcy in your past. Believe it or not, there are a few bankruptcy cards out there that do offer rewards.
Should You Get A Credit Card After Bankruptcy
Getting a credit card after bankruptcy can be a smart move, provided you can manage it responsibly. The bankruptcy will have damaged your credit score, and making on-time credit card payments is one of the best ways to rebuild your creditworthiness. Before filling out a credit card application after your bankruptcy, though, consider the reasons you got into financial trouble in the first place and if getting more credit is a move you can handle at the moment.
Perhaps your bankruptcy was the result of an unforeseen and unlucky event, such as a medical emergency, divorce, job loss or natural disaster, rather than bad money management. In that case, youre more likely to be ready for the financial responsibility of having a credit card again and for beginning the long road to rebuilding your credit. Just make sure to shore up other areas of your financial well-beingsuch as a stable job and an emergency fundso you can be prepared for any unexpected challenges you may face in the future.
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What Is The Easiest Credit Card To Get After Bankruptcy
A secured card will be, by far, the easiest credit card to get after bankruptcy. These cards are designed specifically for those with bad credit who want to rebuild their score.
If you’re hoping to get an unsecured card, we like the Credit One Bank® Platinum Visa® mentioned above. It is one of the easier unsecured cards to get for those coming out of a bankruptcy.
As you get further out from your discharge date, other unsecured cards from Discover, MasterCard and Visa should become available to you. These won’t be lucrative rewards cards but some may come with nice benefits such as no annual fee.
Chapter 7 Bankruptcy And Car Loans
Itâs common to be concerned about whatâs going to happen to your car if you file bankruptcy. Car loans are considered secured debts. If youâre still making car loan payments, you have three options for how to handle your car loan in a Chapter 7 bankruptcy case:
-
Reaffirmation
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Redemption
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Surrender
A reaffirmation agreement brings back to life personal liability on a debt that would have otherwise been discharged at the end of a successful bankruptcy case. The U.S. Bankruptcy Code requires secured debts for personal property, including car notes, to be reaffirmed. Reaffirming your car loan means that you will be personally liable to pay back the debt after bankruptcy. If you fail to make your monthly car loan payments, the car lender will repossess your vehicle.
After a car repossession, the lender will typically sell the motor vehicle at auction. A deficiency balance occurs when the amount received at auction is less than the amount owed on the loan balance. If you signed a reaffirmation agreement that was accepted by the bankruptcy court, then youâre on the hook for any deficiency balance.
Surrendering your car is the third option for how to handle your car loan in a Chapter 7 bankruptcy. If you surrender your car, your creditor will repossess the vehicle and the car loan balance and any deficiency balance will be erased as part of your bankruptcy discharge.
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New Credit Cards After Consumer Proposal
When you file a consumer proposal, you might not have to hand over all your credit cards to the trustee. Trustees have differing views on this.
Some are okay if you have a credit card with a zero balance on it, and if you are not using it at the time of filing, and while waiting for approval of your consumer proposal, they may allow you to keep it.
Now keep in mind even if this is your situation, there is nothing to stop your card issuer from cancelling your card, even if it is in perfect standing.
There is a decent chance they will find out about your consumer proposal and for many card issuers, thatll do it. Your card will be toast.
Also, please understand if this card you are hanging on to was issued by a credit card issuer who is already being affected by your consumer proposal the chances of them cancelling this clean card is pretty much 100%.
When you file your consumer proposal, youll wait forty-five days after you have filed to find out if your creditors accept your proposal as offered.
Most of the time, properly constructed consumer proposals are accepted the first time. If not, the debtor works with the trustee and the creditors to come up with a revised offer that suits all parties.
Once the terms of your consumer proposal have been accepted and approved in court, in my view you are free to turn your attention to rebuilding your credit score with new credit cards too.
Not every trustee feels this way.
Re: Capital One After Bk
Capital One is very forgiving but seeing as how your BK was only discharged last month i’d say its probably a little early. I’ve heard about a year from discharge is good time to try again with CapOne. It may be a good sign that you have a Kohls card since CapOne backs that card. You can always apply and see for yourself if CapOne is willing to give you a card but personally I’d stick to the three cards you have for now and build up some history and save the triple pull. Best of Luck in your rebuild.
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More On Canadas Best Credit Cards:
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How Hard Is It To Get The Capital One Venture Rewards Card
Having a good credit score is one of the Capital One Venture credit score requirements needed for approval.
Capital One recommends having excellent credit before applying for the Capital One Venture Rewards Credit Card. There are a few different definitions for what exactly is excellent.
Basic Capital One guidelines for excellent credit include:
- Never declaring bankruptcy or defaulting on a loan
- Not 60+ days late on any credit card, medical bill, or loan in the last year
- Had a loan or credit card for 3 or more years with a minimum $5,000 credit limit
A previous bankruptcy or loan default doesnt instantly disqualify you from getting the Venture Card. But, these events usually stay on your credit report for up seven years. You may need to wait for the event to fall off your credit history before your score returns to the mid-700s.
The most basic definition is having a 750 credit score . In most cases, you wont have a recent bankruptcy or default and still have excellent credit. This score is the lower range of what the credit bureaus consider excellent credit.
What happens if your credit score is lower than 750 or youve declared bankruptcy before? You can still have good approval odds with a score below 750. Although beerknurd doesnt mention their credit score at the time of approval, they state: I am less than 2 years post Chapter 7 bankruptcy and was approved for a 10k limit as of April 10, 2019.
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Establishing Your Credit Score As A Newcomer To Canada
Unfortunately, if youre a newcomer to Canada, your credit score from your home country wont follow you here. As a result, your credit card choices may be more limited, but this also means you can start building a new score from scratchwhich, for some, can be a positive. One approach is to use a secured card to help you get started, with the goal of graduating to a better, unsecured card.
Another way to build your Canadian credit score might be through a program for newcomers at one of the banks. For example, Scotiabanks StartRight program is designed specifically for newcomers to Canada, providing access to credit, a savings account, no-fee international money transfers, and help from the banks financial advisors. Similarly, BMOs NewStart Program can issue you a credit card, a bank account, a safety deposit box, and even mortgage options.
Evaluate Your Financial Habits
The first step? Take a good, hard look at why you had to file bankruptcy in the first place.
Though bankruptcy is sometimes unavoidable, we all have financial habits we could improve . Whether its forgoing shopping, purchasing health insurance, or building up an emergency fund, consider what you should do to avoid going bankrupt again.
And, if you havent already taken your debtor education course, look at it as a learning opportunity rather than just a legal obligation. By taking this course seriously, youll learn skills such as budgeting and using credit wisely that can help you avoid financial trouble in the future.
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Talk To A Bankruptcy Lawyer
Need professional help? Start here.
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Who Can File A Plan
The debtor has a 120-day period during which it has an exclusive right to file a plan. 11 U.S.C. § 1121. This exclusivity period may be extended or reduced by the court. But in no event may the exclusivity period, including all extensions, be longer than 18 months. 11 U.S.C. § 1121. After the exclusivity period has expired, a creditor or the case trustee may file a competing plan. The U.S. trustee may not file a plan. 11 U.S.C. § 307.
A chapter 11 case may continue for many years unless the court, the U.S. trustee, the committee, or another party in interest acts to ensure the case’s timely resolution. The creditors’ right to file a competing plan provides incentive for the debtor to file a plan within the exclusivity period and acts as a check on excessive delay in the case.
Only the debtor may file a plan in a subchapter V case. 11 U.S.C. § 1189.
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Capital One Savor Cash Rewards Credit Card
Disclaimer The information about the Capital One® Savor® Cash Rewards Credit Card has been collected independently by MoneyUnder30.com. The card details have not been reviewed or approved by the card issuer.
The Capital One® Savor® Cash Rewards Credit Card is great for those who love to dine out. It offers 4% cash back on dining and entertainment, 2% at grocery stores, and 1% on all other purchases.
Chase Freedom Unlimited® comes with no shortage of enticing perks: no annual fee, the opportunity to earn a $200 cash bonus after spending $500 in the first three months, 5% on travel booked through Chase Ultimate Rewards®, and 3% cash back on dining, including takeout and eligible delivery services.
Youll also get an additional 3% cash back on drugstore purchases, and 1.5% cash back on all other purchases, plus 0% Intro APR on Purchases for 15 months.
Read our full review of the Chase Freedom Unlimited®.
Capital One Application Rules
There’s one Capital One application rule that applies to all its credit cards: You can’t make more than one application every six months.
After you apply for a Capital One card, you need to wait at least six months before applying for another, regardless of whether Capital One approved you or not. A high credit score won’t get you around this restriction.
Capital One also has rules about the maximum number of Capital One cards you can have and the minimum income requirements for its cards. The tricky part is these rules vary depending on the Capital One card you want.
Here’s what this means:
- With some cards, such as the Capital One Venture Rewards Credit Card, you’ll be ineligible if you already have five or more Capital One cards. With others, you’ll be ineligible if you have two or more Capital One cards.
- Minimum income requirements: For some of its cards, Capital One requires that your monthly income exceeds your rent or mortgage by at least $425. For others, your monthly income must be at least $800 greater. Note that Capital One reserves the right to deny your application for insufficient income even if you meet these requirements.
You can find the exact rules for the card you want on Capital One’s site. Just visit the card’s page, go to the “Rate and fee information” section, and then scroll down to “Additional Disclosures & Terms and Conditions.”
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How Can I Rebuild My Credit After A Bankruptcy
You may find it easier than you would expect. There’s no doubt that after a bankruptcy, your credit score will be thrashed, and the bankruptcy will remain on your credit report for seven to 10 years . There’s no minimizing the financial “fun” of a bankruptcy.
That said, rebuilding your credit after a bankruptcy can definitely be done. Your first move should probably be to apply for a secured credit card. These are credit cards that work like any credit card, except for an important distinction: you’ll put down a refundable deposit and then use the secured credit card to make purchases.
After a year or two of using the secured credit card responsibly, the credit card company you have the card with will likely give you that refundable deposit back – and invite you to apply for an unsecured credit card with them.
That said, you may be able to successfully apply for a no-frills, or not many frills, credit card designed for people with fair or bad credit. You could try doing that before applying for a secured credit card, if you’re not excited about paying money upfront, money that, again, is refundable.
In any case, you should find with a few select credit card issuers and lenders like car dealerships, that life still goes on, and you’ll still be lent money . After a bankruptcy, with your worst debts hopefully discharged and behind you, lenders know that you probably have more money now to pay off anything you borrow.
