Many people grew up with that one credit card “just for emergencies.” There’s nothing wrong with that—until the emergencies pile up faster than you can pay them off. Or you use the credit card to purchase things you cannot afford at that particular time.
The purpose of bankruptcy is to give you a break, take control of your financial situation and get a fresh start. So, keeping existing unsecured debt rarely makes sense.
If you have a credit card with a zero balance when you file, then the credit card company may or may not choose to let you keep it open. The point is that you can have a zero balance on an existing card and the credit card company still might cancel the card. Therefore, using cash to pay off an existing balance rarely makes since because you can get a new credit card for free after you file your bankruptcy case. Also, there are bankruptcy laws that prevent payment to a creditor of more than $600 within 90 days of filing bankruptcy because it is considered “preferential” treatment of a creditor at the expense of other creditors.
However, the other side of bankruptcy is much different than most people think. There is a huge credit market for people who have filed bankruptcy. So, getting a new credit card is not the problem. The problem is saying “No” to all the new offers that you will receive after your file your bankruptcy case.
Rebuilding credit is typically a good idea. However, you need to do so slowly and responsively. You don’t want to jump back in the hole that you just got out of.
Here is a strategy about getting and using credit cards after your file for bankruptcy. First, you need to choose a card or cards with limits that you can pay off each month if you use the card. Second, you must be in the habit of paying the card off each month regardless of how bad it “hurts.” You do not want to carry balances.
Over the past 30 years, the Law Offices of Christopher A. Benson has helped over 2,300 of Washington clients take control of their financial situation.
We handle cases in both Pierce and King County. We are centrally located so that we can easily serve clients from all over.
We can stop your garnishment and change your monthly payments for all your combined unsecured debt, and if you have had more than $600 garnished within the last 90 days, we can get all of the money back in most cases. But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.
About the Author
Chris served on the Board of Directors for Habitat for Humanity
Seattle/S. King County for 10 years and served as Vice President
of the organization during part of that time. Read More