A Credit Card After Bankruptcy Is With More Costs!

By Ian Black

In spite of the stigma and possible embarrassment of filing for bankruptcy, many folks have mitigating circumstances that make it often their only option to bypass repeated court proceedings against them. One thing that often worries these people is the obtaining of a Credit Card after Bankruptcy.

However regardless to what some may think obtaining a credit card after bankruptcy isn't impossible. There are companies willing to provide this although normally you can expect high interest rates and additional annual fees.

One the reasons companies will offer a credit card after bankruptcy is the fact that a person cannot file for bankruptcy for at least seven years after the initial action has been discharged.

Knowing this, these credit card companies have a legal recourse in collecting on any unpaid debt resulting from the card's use. While most debt charged on a credit card is considered unsecured, if the cardholder cannot file bankruptcy, the company can use wage attachment to gain repayment.

However as you will see it is one thing to obtain a credit card after bankruptcy but it is another to be able to use it safely. The danger is that with higher interest rates and extra fees on late payments you can quickly end up back in a bad credit situation.

Many companies offering a credit card after bankruptcy offer it as a help in rebuilding a credit rating and even with annual fees as well as processing fees, sometimes equaling the initial credit limit, people take them out hoping to get back on their financial feet.

Things can go from bad to worse

Here is a little example for you: Say a person has a credit card after bankruptcy with initial fees of $290 with an initial credit limit of $300. If this person is even one day late with a payment he or she could be looking at a late fee of around $30!

But it gets worse; all this will push your liability up to $320 which in turn will give you an additional $30 fee because you were over your limit. Now you would have a $350 debt.

On top of all this since you have failed at this point in your obligations, your interest rate on your card can very quickly go to the maximum allowed by law.

With the exception of actually paying up there really isn't an easy way out at this stage, especially as many companies will make the demand that they are paid in full within 30 days.

Wage garnishment, court proceedings and daily phone calls are just some of the things you can expect from here on in and it could well be years before you manage to clear up all your debts.

As you can see although obtaining a credit card after bankruptcy is possible, the consequences if you are unable to keep up with payments can be very severe, so whether or not you should get a credit card after bankruptcy is going to depend on your situation and your ability to pay on time. - 23218

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Also read Mortgage Loan After Bankruptcy or visit our blog to read more about the Different Types Of Bankruptcy