Don’t be afraid to use a credit card after bankruptcy. It is actually a necessary part of rebuilding your credit score.
According to the latest numbers, American consumers are doing a better job managing their debt now that at any time since the Great Recession of 2008. Bankruptcy filings are at their lowest rate in 7 years, delinquencies are declining, and fewer people are being targeted by debt collectors.
However, the economy is still rough and many Americans are unemployed or underemployed. This may be a contributing factor in the increase in consumer debt we’ve seen in recent years—consumer debt is actually up 29 percent since the end of the Great Recession.
If you are carrying significant debt, it may just be a matter of time before you need to file for bankruptcy.
Credit card debt is one of the biggest contributors to unmanageable debt for many American families. Fortunately, it can be eliminated with a Chapter 7 bankruptcy, or reduced to a manageable payment with a Chapter 13 bankruptcy.
Recovering From Bankruptcy
Bankruptcy can provide a fresh start for your financial future, but you need to be very mindful of how you manage your money and rebuild your credit if you want to make the most of this fresh start and move forward in your life, rather than backwards right back into deep debt.
Here are some important tips that will help you understand the right and wrong ways to use your credit cards after bankruptcy.
Right Way
These three simple rules will help you rebuild your credit score as quickly as possible after a bankruptcy:
- Open a credit card as soon as possible after your bankruptcy goes through. You may not qualify to open a regular account right away, but you can get a secured credit card which will allow you to borrow against a deposit given to the credit card company
- Make purchases on your card every month, but do not spend more than 30 percent of your credit limit
- Pay your balance in full and on time each month
Wrong Way
Don’t fall into any of the traps that may have set you on the path towards bankruptcy the first time around:
- Don’t open more than one credit card—one is all you need to rebuild your credit
- Don’t spend more on your card than you can pay off at the end of the month—not even to earn a reward
- Don’t take out high-interest cash advances on your card
Want to Learn More About Life After Bankruptcy?
Contact California Bankruptcy Relief. Our expert bankruptcy attorneys can fill you in on all the details of the bankruptcy process and recovery period to help you decide if bankruptcy is the right choice for you.
