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Should you get a secured credit card after Chapter 7 bankruptcy?

On Behalf of | Sep 5, 2019 | Chapter 7 Bankruptcy |

Financial issues are nothing new to residents of Texas. Whether they come about through sudden events such as a job loss, a divorce, or an illness or injury, or through other means, they end result is the same — calls from debt collectors, struggling to stay afloat and looking for debt relief options. Many of them file for Chapter 7 bankruptcy and then wonder how to rebuild their credit afterward.

One option is to obtain a secured credit card, but they are not for everyone. An individual can use the card for purchases just as any other credit card. However, the credit limit is based on a deposit made by the person to whom is issued. Some companies allow the user to spend up to the credit limit while others restrict usage to a certain percentage.

A secured credit card is not like a debit card, however. The user does not use up the money deposited. Instead, he or she must make payments on the balance owed. The security deposit remains with the card issuer until the account closes, the card is upgraded to a regular account or the user defaults. Making on-time payments can help rebuild credit.

However, depending on the reason for the Chapter 7 bankruptcy, using a secured credit card may not be the best option for rebuilding credit. Before obtaining one, a Texas resident may want to thoroughly explore the pros and cons of these cards. An experienced bankruptcy attorney who also helps clients with regain control over their finances and make the most of the fresh start bankruptcy often provides.