When you are in debt, you may be willing to do anything to obtain relief, especially if the debt keeps accumulating and you are facing harassment from creditors. However, you must understand that this process is not without its impacts, including your ability to obtain loans following your case. Additionally, you should understand that this process can impact your ability to keep your credit cards. As such, if you are unsure what will happen to your lines of credit when filing, you’ll want to keep reading. The following blog explores what happens to cards, if you can secure new cards after filing, and the importance of working with Franklin County bankruptcy lawyers to explore your legal options.
What Happens to Credit Cards During Bankruptcy?
When you file for bankruptcy, you are eligible to include the debt accumulated on your credit cards in the filing. In fact, this is a dischargeable debt, meaning you can have it discharged at the conclusion of your bankruptcy case. This essentially means that you no longer have a legal obligation to repay these debts.
Generally, when you declare bankruptcy, your creditors will all be notified, including your credit card lender. As such, they will likely close your account, as filing often violates the terms of the contract you signed when opening the card. This is also the case if you have no debt on your credit card, and your account balance is $0. However, it is ultimately up to the card issuers as to how they wish to handle your account after you’ve declared bankruptcy.
Will I Be Able to Secure a New Card After Filing?
If you are interested in applying for a credit card after your bankruptcy case has closed, it’s necessary to understand that this process can be difficult. Bankruptcy can decimate your credit score, making it incredibly difficult to qualify for and be approved for loans and lines of credit. For example, if you have a score over 700 before filing, you’ll find that it will likely drop 200 points once you declare. Credit card companies will worry about your ability to repay the funds, and may deny your card application as a result.
However, you should consider applying for a rebuilder credit card. These are cards intended to help those with low credit improve their scores by offering low credit limits and high interest rates. However, keeping purchases on this card low and paying off the balance every month will negate the interest rates.
As you can see, navigating the bankruptcy process can be incredibly difficult. That is why working with an experienced attorney with Cousino & Weinzimmer LLC is in your best interest. Our firm will do everything possible to help you in the fight for the best possible outcome when you file. Contact us today to learn more.
