Credit Cards and Rebuilding Your Credit After Chapter 7 Bankruptcy in Killeen & Waco

Did you know that credit card debt is one of the biggest reasons people file bankruptcy cases each year? While receiving a bankruptcy discharge can be a huge relief, please be careful as you attempt to re-establish your credit, especially with credit cards. Remember, the interest rates are always terribly high, especially after a bankruptcy. Additionally, credit card companies can raise your interest rates at any time (although they are required by law to give you advance notice). Here are a few things to keep in mind as you attempt to rebuild your credit after you receive your bankruptcy discharge.

First, do not take the first credit card that is offered to you after your case is filed or after you receive your bankruptcy discharge. Even though you are now debt-free (except for your house/rent payments, utilities, and vehicle expenses), you are still financially vulnerable. Unless you received a substantial raise after your discharge or you change jobs, you are still earning the same salary that you were earning prior to the bankruptcy filing. You also probably have very little savings. Take some time to rebuild your savings account. Catch your breath and enjoy being debt-free! Generations before lived very fruitful lives without credit card debt. There is plenty of time to obtain a new credit card.

Understanding the Bankruptcy Process: Your Path to Financial Recovery

Navigating the bankruptcy process can be overwhelming, but understanding its stages can empower you to make informed decisions. At Erin B. Shank, PC, we believe that knowledge is key to regaining control over your financial future. Our team is dedicated to guiding you through each step, ensuring you understand what to expect and how to prepare.

The bankruptcy process generally involves the following stages:

• Initial Consultation: Discuss your financial situation with our experienced attorneys to determine the best course of action.
• Filing for Bankruptcy: We assist you in compiling the necessary documentation and filing your petition to initiate the bankruptcy process.
• Automatic Stay: Once filed, an automatic stay goes into effect, halting collections and giving you breathing room.
• Credit Counseling: Mandatory credit counseling helps you explore alternatives and prepares you for the financial responsibilities ahead.
• Discharge of Debts: After fulfilling the necessary requirements, your debts are discharged, allowing you to start fresh.

By understanding these stages, you can approach your bankruptcy journey with confidence. Our dedicated team is here to support you every step of the way, ensuring you have the resources and knowledge needed to rebuild your financial health.

Strategies for Credit Rebuilding Post-Bankruptcy in Central Texas

Contrary to what you have heard, it is not going impossible to begin re-establishing your credit. Many creditors, especially credit card companies, know that if you have filed a Chapter 7 bankruptcy, you can not file another Chapter 7 bankruptcy case again for eight years. Therefore, unlike other people who have not filed bankruptcy, these creditors know that if you do not pay them, you will not be able to file another bankruptcy case for an extended period of time. You might be surprised at how many offers you begin receiving. Don’t fall prey to those solicitations. There is no reason to have more than one or two credit cards anyway. Too much plastic in your wallet can just get you in trouble again!

Avoiding Predatory Lenders After Bankruptcy Discharge

The truth is you can actually be considered an ideal customer to these predatory lenders. An ideal customer to these creditors is someone who pays high interest, charges over the limit, and then is charged over the limit fees, pays late, and therefore incurs penalties. All of these actions result in hefty fees. Whether you feel vulnerable or not, predatory lenders love to make money on customers like this.

Smart Credit Card Practices for a Strong Financial Future

If you do obtain a credit card after your discharge, pay that debt in full and before it is due. Get into the habit of paying your bills as soon as you receive them. Most importantly pay the balance on any post-discharge credit card you receive in full each month. If you can not pay the balance in full, pay as much as you can and take that card out of your wallet. Do not put any additional charges on that card until you are able to pay it in full each month. Do not get caught in the cycle of paying the minimum amount due each month. Paying only the minimum payment due and continuing to use the card will only result in a debt that you can not repay.

Make Informed Financial Decisions Post-Discharge

Everyone is anxious to start rebuilding their credit after they have received a bankruptcy discharge. However, it is better to be careful and deliberate to make sure that you are making sound financial decisions as you begin your financial fresh start.

Contact Us for Personalized Financial Guidance in Killeen & Waco

Learn more about how we can help you by contacting us online or calling (254) 690-4110 today!