Can I get credit after bankruptcy?

Yes! Not only can you get new credit, doing so after a bankruptcy may improve your credit score. If you have completed a debt discharge in bankruptcy, you should still apply for a credit card. The credit card lender will look at your income, expenses and the clean slate from negative payment history. If your income is above the federal poverty level, you should be able to qualify for a credit card. However, not all credit is the same.

What is an unsecured credit card?

An unsecured credit card is one that does not require a deposit. Unsecured credit cards are not secured by an asset, such as a car or house. Unsecured credit cards are easier to qualify for than secured credit cards, because the unsecured card issuer does not have to worry about the asset if you cannot make your payments.

What is a secured credit card?

A secured credit card is backed by a deposit, such as a savings account; or, is tied to your assets. The deposit or assets acts as collateral for the credit card. If you do not make your monthly payments, the card issuer can sell your deposit or associated assets.

What is the difference between secured and unsecured credit cards?

Secured credit cards are backed by a deposit or assets as collateral.  Unsecured credit cards do not require a deposit and are not tied to any assets as collateral. In short, unsecured credit cards are less risky. Failing to miss a payment on an unsecured credit card may result in debt collections and negative marks on your credit score; but, they cannot garnish your wages or repossess any assets. Secured debts are more risky as the deposit or assets as collateral can be legally taken by the credit issuer if payments are not made.

In some situations, unsecured credit can be easier to obtain for post-bankruptcy consumers. There are many lenders that market lines of credit to post-bankruptcy consumers looking to rebuild their credit. However, not all credit is equal. Securing credit after a bankruptcy should be part of your financial recovery plan and not a process of resuming extensive purchases.

For more about credit after bankruptcy or how to get out of debt while protecting existing assets, contact our Houston bankruptcy lawyer office today by calling (713) 979-2279.