Many bankruptcy filers are wondering whether they are entitled to keep one or several credit cards for emergencies backup. In general, you may not because your credit cards will be cancelled regardless, since you file the bankruptcy. The credit card issuers tend to punish their card holders for filling any kind of bankruptcy; in most cases, the credit cards of bankruptcy filers will be terminated once they file for a bankruptcy. But there are some exemptions where terms and conditions will be applied to enable the bankruptcy filers to continue holding their credit cards.
There are some exceptions applicable only to chapter 7 bankruptcy filers. Some credit cards issuers will allow you to keep your credit card but with a sized down credit limit, and in return you need to repay them for some of your debts. In fact, some companies will automatically send you or your attorney a proposed reaffirmation agreement, a contract between you and your creditor that you will pay all or a portion of the money owed, despite the bankruptcy filing, in exchange for a minimal amount of new credit.
Beside the sized down credit limit, a chapter 7 bankruptcy filers may allow to keep their credit cards by some of their card issuers but the interest rate will be revised to a higher than the normal interest rate. But, if you can always pay your credit balance in full each month, you will never incur a finance charge, and the high interest rate wont hurt you.
Other than chapter 7 bankruptcy filers, all credit cards must be given up at the filling of bankruptcy. However, there are credit card holders who have maintained their credit cards at zero balance for a long period of time do not report their credit cards during the filing. This action can be considered illegal since in effect your preference on one creditor (your credit card issuer) over other creditors, because repayment ordination is a trustee job.
If you are not eligible to file under chapter 7 or even you are filling under chapter 7 but you didnt manage to get approval from your credit card issuers to keep your credit cards, the best thing is report all your credit cards and give them up. In most cases, your need to wait until the bankruptcy filing has cleared and then work with a debt management consultant to rebuilt your credit step by step. Of course, in the months and years after the bankruptcy filling, you may not be eligible for top-tier or even middle-tier credit cards.
But with some efforts and fiscal strategy such pay your monthly credit balance in full and on schedule will help you to rebuilt your good credit record and you can begin to erase the stigma of the bankruptcy; and eventually put you back in the realm of good to high credit score.
In Summary
In most cases, bankruptcy filers need to give up their credit cards. But, there are exceptions for bankruptcy filers in chapter 7, the debtors who file their bankruptcy under chapter 7 may allow to keep their credit cards with some terms and conditions.
One of the first things that an individual needs to learn when they get their first credit card is how to use the credit card. It might sound obvious when to use and not use the credit card that you've just acquired. However, there are tips you can learn that will help you manage your credit card debt, while simultaneously building good credit for future purchases.
Having a lot of debt can be detrimental to your financial situation in a number of ways. Firstly, if you have a heavy amount of debt from your new credit card and are unable to pay it off, you will see heavy interest payments added to that debt. On top of this your credit rating will start to decline which is going to impact your access to finance in the future when buying a new house or a car.
What are the best ways to get the most out of your credit card and use it to your advantage without falling into the debt trap? One smart suggestion is to use online banking. With online banking you don't have to wait for the monthly statement and can track your balance and spending patterns in close to real time. In addition, you can stay on top of what has been charged to the account. This way, you will instantly know if someone has stolen your credit card - or your identity - and can keep tabs on what the credit card bill will be at the end of the month. Best of all, you can access your online banking account at any time of day, never waiting for a bank to open or having to make a call to see what your balance might be. Make sure that the credit card offers you are entertaining have this option available for you.
One of the toughest things for new credit card owners to determine is the simple question: do I really need this? When you have a credit card in your hand, it's much easier to buy things with the idea that you will pay it off at a later date. Never forget that your credit card limit isn't cash, it's simply a limit on what you can borrow. When making a big purchase you should avoid impulse purchases and always give yourself time to cool off before a purchase and have a clear head. It's easy to get excited and drawn in with new credit card offers which seem like a great deal and mean you can but your dream items faster but you need to think about the realities of whether you can afford it.
Pay more than your minimum credit card payments each month. Even if you just pay a few dollars more than required each month, your debt will be much more manageable than if you pay the minimum alone. You can enjoy a lower debt ratio and will be able to take advantage of the benefits of a credit card without struggling with huge debts. It's possible to have a credit card and lower debt to give you the best financial situation.
Look into low interest credit cards that will help you manage your debt more appropriately. Low interest credit cards give you an immediate boost when handling your debt since it will ensure your monthly interest payments are as low as possible.
Both Cornie Herring & Richard Greenwood are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Cornie Herring has sinced written about articles on various topics from Credit Cards, Financial Planning and Free Credit Report Score. Cornie Herring is the Author from . "StudyKiosk-Credit Basics" is an informational website on credit basics, debt consolidation and. Cornie Herring's top article generates over 49500 views. to your Favourites.
Richard Greenwood has sinced written about articles on various topics from Debit Credit Card, Credit Card Offers and American Express Card. Richard Greenwood is founder of online comparison website click4credit.com.au featuring cards from leading issuers including the. Richard Greenwood's top article generates over 135000 views. to your Favourites.