Are Credit Cards Subsequent To Bankruptcy A Dangerous Choice?

By Chris Safin

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.

Neither the less, there are some financial companies that have no trouble offering to issue a person a credit card after bankruptcy, although usually with a higher interest rate and annual fees attached.

Did you know that once you have filed bankruptcy you cannot do so again for an additional seven years? This is why you will find some companies willing to provide you with a credit card.

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.

Although these credit cards are available after bankruptcy they can be a risky option for some. Not only will you be dealing with higher interest rates but you will be charged on late payments and this can quickly add up.

Credit cards after bankruptcy are very often offered by companies supposedly as an option to help rebuild ones credit rating. People will very often pick these cards up in the hope of getting back on their feet. This is despite the fact that total annual fees can sometimes even equal that of their initial credit limit.

For some things quickly get worse and 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.

You also would have no way out except to pay the balance on the card and some companies will make the demand that the balance be paid in full within 30 days or face collection action.

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.

So there you have it, is it possible? Yes. But is it advisable? That is obviously going to depend on your ability to keep in check with payments and just how much you really need a credit card after bankruptcy. - 23223

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Also see Mortgage Loans After Bankruptcy and or read this site to learn some more on all the Types Of Bankruptcy