Applying for a Credit Card After Bankruptcy


How long has it been since you filed your bankruptcy, and was it a chapter seven or a chapter 13? The time you file and the type of bankruptcy you file will make a difference when you can find good credit cards. If you try to get a credit card too soon after filing, then you will likely be stuck with cards with high-interest rates and annual fees. However, if you wait the right amount of time after a bankruptcy, then you may find favorable unsecured credit cards to rebuild and reestablish your credit.

How Long Do You Need to Wait?

The length of time you will need to wait after a bankruptcy to apply or get approved for a new credit card depends on the type of bankruptcy you file. For example, if filing chapter seven, you may only need to wait about three months before your credit is strong enough for credit card approval. However, if you file a chapter 13, then you will need to wait significantly longer, about three to five years.

The reason there is a significant difference in the timelines is because of the specifications of the bankruptcy types. Chapter seven involves the liquidation of assets to cover outstanding debt, which is then paid quickly. Alternatively, Chapter 13 uses an adjustment-of-debt plan to pay portions of existing debt over three to five years.


What Type of Credit Card is Best?

The best type of credit card is an unsecured card with a low-interest rate and no annual fee. Unfortunately, such a card may not be available to you, depending on the duration of time since filing. You can likely get approved for a secured card, which works like a debit card, but reports to credit bureaus. However, if you want an unsecured card, then you have two options: apply for a card with less than optimal terms or become an authorized user on someone else’s.

While applying for your own card seems best, it can leave you with annual fees of around $100 per year and restricted credit amounts, typically not exceeding $300 to $500. As an authorized user on someone else’s card, you get the benefits of a credit boost, without too much risk, especially if you do not use the card. However, being an authorized user is only beneficial if the original user is in good standing because your credit reports will take the hit if the card falls behind in payments or exceeds limits.

Finding a credit card after bankruptcy can be difficult. If you would like to talk about credit and bankruptcy options, then contact a bankruptcy lawyer.