Most borrowers struggling with debts they can’t repay welcome the opportunity to discharge their credit cards in bankruptcy. However, you might want to hold onto a card in case of emergencies or to help rent a car in the future. While most lenders will let you keep your credit cards after filing your petition, you should carefully explore your options before reaffirming a debt.

4 Tips About Using Credit Cards After Bankruptcy

1. Only Reaffirm Cards With Low Balances

Reaffirming a debt in bankruptcy means you’ll still be responsible for paying it back after your case is discharged. If you’re confident you can pay off the remaining balance, keeping the card might be a good option. However, if you still owe more than you comfortably repay, you could still find yourself in financial trouble later.

2. Check the New Agreement

When reaffirming a debt, you’ll have to enter into a new agreement with the lender. In many cases, this can mean paying a dramatically higher interest rate than you had before the bankruptcy, and the lender might add an annual fee or other costs.

3. Consider Getting a New Card

If the interest rate or balance is too high, discharging the debt and opening a new card may save you considerable money in the long run. Even if you’ve just filed for bankruptcy, you’ll likely be able to open a secured card with low fees and interest. Within a few months, you may be able to get a new unsecured card and start rebuilding your credit.

4. Consider Your Purchases Carefully

When you file for a Chapter 7 bankruptcy, lenders may review your purchase history for signs of fraudulent purchases. If you purchased luxury items within 90 days of filing for bankruptcy, the court will presume those charges were fraudulent unless you can prove you intended to pay.
 

For nearly 20 years, Jerry Bueker at the Bueker Law Firm has been helping struggling borrowers throughout central and southeast Arkansas get the relief they need. If you’re struggling with unmanageable debts, he’ll guide you through the process and help you make the best decisions for your financial future. Visit the law firm online to learn more about Chapter 7 bankruptcy, follow their Facebook for more tips and insight, or call (870) 673-1313 to arrange your initial consultation today.