Are Credit Cards After A Bankruptcy Filing A Risky Choice?

By Jamey Smith

As much as we all would want to avoid having to file bankruptcy, sometimes for some people there really is no other option, when this occurs these people often start worrying about things like the obtaining of a good credit card after bankruptcy.

Credit card after bankruptcy however are indeed available but the catch is that normally you can expect to end up paying fairly high rates for the privilege and even 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.

You see normally credit card debt is considered un-secure, but when the person in debt cannot file bankruptcy the credit card company has the option to use wage attachment to get back the money.

There are numerous dangers is obtaining a credit card after bankruptcy, beyond the usually higher interest rate, as charges for being late with a payment as well as annual fees can quickly put the person into a bad credit risk again.

It is not uncommon for people to take out these cards in an attempt to better their financial situation, this is despite the fact that it is not unusual for the total annual fees associated with the card to add up to much as the card holders very credit limit.

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!

In turn this would push-up the liability to $320 which would cause another $30 fee for being over the limit, this means that the credit card holder would now have a debt of $350!

To make matters even worse the interest rate on this card could quickly add up on the maximum that is allowed by law since the obligations on the credit card after bankruptcy were not met.

There really is no way out either, with the exception of paying the balance on the credit card. Quite a lot of companies demand that the payment be made within 30 days and if that does not happen you would 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 as you can see although it is possible, it comes with some possible hefty consequences! The bottom line is, it will depend on your situation and your ability to keep in check on your payments as to whether it would be for you or not. - 31384

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