It’s a myth spread by lenders and big banks that you cannot get a credit card after bankruptcy.
HOW LONG DOES IT TAKE TO GET A NEW CREDIT CARD AFTER BANKRUPTCY?
My clients usually receive offers for new credit cards in the mail within a month of filing for bankruptcy relief.
This is even before the bankruptcy case is closed and the discharge order is entered.
At the hearing, which happens one month after filing, I make a point of asking my clients how many of them have received pre-approved credit card offers.
- More than half of them say they have received offers
- Even more get offers for car loans
Why can you get a credit card so quickly?
It is true that you will close many of your old credit cards as part of filing for bankruptcy, but you will be able to open new accounts very soon.
This surprises many of my clients because they thought they would never borrow money again, but this is a myth spread by lenders.
- The truth is that lenders have an incentive to lend to people that have recently filed bankruptcy
This is because you will have no debt after filing for bankruptcy and are much more likely to pay off the loan.
Lenders spread the myth that they won’t lend you money after you file for bankruptcy because they know that they will get nothing if you file for bankruptcy.
- Once you have filed your bankruptcy case, however, they have already lost, and they know it, so they will lend to you again to earn interest
WHY DO LENDERS LEND TO YOU AFTER BANKRUPTCY?
Lenders have an incentive to lend to you after bankruptcy.
Remember, filing bankruptcy:
- Improves your personal balance sheet
- Discharges many types of debt
- Generally leaves you with all or most of your assets
Most importantly, bankruptcy does not take away your ability to work and earn a living in the future.
So, when companies make loans to people, the lender expects to be repaid out of the borrower’s future pay.
A bankruptcy filing makes this more likely because it gets rid of the other creditors that are already trying to get paid back out of the same future pay. It also voids any judgments against the borrower so that nobody can garnish his or her wages.
A Chapter 7 bankruptcy also makes someone more creditworthy because that person can’t file again for 8 years.
Someone who has not filed a case could file for bankruptcy at any time, but someone who just finished one can’t file another for many years, and is probably mostly concerned with rebuilding their credit.
Research has shown that the majority of people who file a bankruptcy only do it once.
This proves my observation that people usually file bankruptcy because something bad has happened in their lives, such as an injury, a loss of income, a divorce, or a business that is losing money.
People don’t file bankruptcy to take advantage of creditors, or because they are bad with money. They file it because they need to.
If you need to file for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy but are anxious you won’t get credit card after bankruptcy, then we can help.
Contact Us now at 612.824.4357 and tell us how we can help you.
Photo Credit: © Roughcollie | Dreamstime.com