Is It A Good Idea To Get A Credit Card During Bankruptcy?
Getting a Credit Card During Bankruptcy
Credit cards have long been one of the most popular financial products in the world.
Making it easy to make secure payments wherever you are, a tool like this can provide a huge amount of value to normal people.
Of course, though, when you’re going through the process of bankruptcy, is it a good idea to use something like this?
Let’s take a look.
Need Help Reviewing Your Financial Situation?
Contact a Licensed Trustee for a Free Debt Relief Evaluation
Can A Credit Card Rebuild Your Credit?
Credit cards are well-known for their ability to alter your credit rating, and there are a number of ways that this can happen.
If you fail to make repayments, for example, your score will go down, negatively impacting your ability to get loans in the future.
This isn’t the only direction that your credit card can take your credit score in, though.
Lenders will be happy if you are only using your credit card for small purchases and make sure that you pay the money back quickly.
In fact, if you always make sure to pay your balance before the month is over, your credit rating is likely to improve.
This means that a credit card can be used to rebuild your credit, but you have to be extremely careful.
What Can Go Wrong With A Credit Card During Bankruptcy?
While it is possible to get a credit card when you’re going through bankruptcy, it’s likely that you have a poor credit score at this point, and this means that you’ll only be able to access credit cards with high-interest rates.
This will make them cost a lot more than their cheaper counterparts, while also giving them the potential to trap you with unmanageable payments.
This could leave you in a position where you need to file for bankruptcy again before you manage to get yourself out of it for the first time, though most people simply find themselves struggling more than they have to.
Your lenders won’t give you any special treatment because you’re in this position, and some may even be harder on you because of it.
Dealing With A Credit Card During Bankruptcy
As you can see, there are two sides to having a credit card during bankruptcy.
On the one hand, this sort of service can help you to improve your credit rating.
On the other, though, it can make your life a lot harder, forcing you back into the debt trap you were in at the start of the process.
The difference between these two outcomes can be as simple as following the right tips.
To start, you should never use your credit card as a loan, instead using it as a replacement for cash when you’re out and about.
You should also make sure that you work hard to keep up with your monthly payments, while also looking for credit cards with better rates as your credit score improves.
Here at Bankruptcy Canada, our skilled team of financial experts can help you through this process, offering all of the support and advice you need along the way.
How to File for Bankruptcy
What is Bankruptcy?
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?