Credit Card Bankruptcy

There are a few interesting issues related to credit cards and bankruptcy to discuss including the dischargeablity of credit card debt in bankruptcy, and what causes credit card bankruptcy debt to sometimes ride though bankruptcy as still enforceable. Another common interest is credit cards after bankruptcy or how to get a new credit card after bankruptcy.
CREDIT CARD DEBT AND BANKRUPTCY
The great majority of credit card debt gets discharged in bankruptcy without any issues, however, there are circumstances with give rise to creditor objections to the discharge of credit card bankruptcy debt. These will be discussed below. Keep in mind, however, the credit card bankruptcy creditor must take action to protect their potential claim fairly quickly after the bankruptcy case is filed. Each of these actions, on the part of credit a card bankruptcy debtor, increases the likelihood a credit card debt will survive bankruptcy as "nondischargeable".
  1. Noticeable increase in credit card usage shortly before bankruptcy filing;
  2. Heavy use of newly issued card without repayment;
  3. Cash advances in months prior to filing without repayment;
  4. Use of card for luxury items (jewelry, electronics, travel or vacations);
  5. Pattern using one card to pay off another (balance transfers);
  6. Exceeding credit limit through usage;
  7. Using card while unemployed or without reasonable belief or ability to repay debt;
  8. Large balance accumulated without any type of payment;
  9. Charges made after consulting with bankruptcy lawyer.
These are just some of the issues which can give rise to a non-dischargeablity action on credit card debt in bankruptcy. The general rule of thumb for a credit card bankruptcy debtor to live by is: you must have the ability and the intent to repay the debt at the time of the credit card charges. This is hard to quantify, so the courts have provided debtors with a roadmap to determining whether credit card debt in bankruptcy may be considered fraud:
  1. the length of time between the charges and the bankruptcy filing;
  2. whether or not an attorney had been consulted concerning the filing of bankruptcy before the charges were made;
  3. the number of charges made;
  4. the amount of the charges;
  5. the financial condition of the debtor at the time the charges were made;
  6. whether the charges were above the credit limit of the account;
  7. whether the debtor made multiple charges on the same day;
  8. whether or not the debtor was employed;
  9. the debtor's prospects,
  10. whether there was a sudden change in the debtor's buying habits; and
  11. whether the purchases made were luxuries or necessities. See In re Dougherty, 84 B.R. at 657.
These issues can be complex and vary with the individual circumstances of the credit card debt in bankruptcy and the debtor's credit card bankruptcy filing. It is important to speak with an expert bankruptcy attorney to resolve these credit card bankruptcy issues before filing.
CREDIT CARDS AFTER BANKRUPTCY
Debtors who have filed for bankruptcy protection may still want to have a credit card (even though it's probably credit cards that caused the bankruptcy in the first place). Although a bankruptcy filing can appear on your credit report for up to 10 years, this does not mean you necessarily have bad credit or will not be able to get a credit card again. In fact, there are cards available to debtors immediately after the bankruptcy case is filed.
Following a bankruptcy, the length of time until you get approved for an unsecured credit card after bankruptcy varies. Of course, most consumers will be able to get approved for secured credit cards immediately after bankruptcy. Whether or not you get approved for a credit card after bankruptcy (and for how much) are entirely up to the banks that issue credit cards. It is possible that you could be approved for an unsecured credit card soon after bankruptcy, but it depends on the issuer and the credit cards after bankruptcy programs they have available.
The bad news is that it is likely any credit card after bankruptcy you are approved for will carry a high interest rate and a low credit limit, at least initially. The reason for this is because banks feel you are a greater credit risk, after just filing bankruptcy. This notion is actually not true, however, as after a bankruptcy to rid yourself of debts, you actually have a greater ability to repay any new debt you may incur. Various credit cards after bankruptcy for people with bad credit may charge an annual fee, as well. But if you want to begin repairing a damaged credit history, responsible use of a credit card after bankruptcy goes a long way toward accomplishing credit repair after bankruptcy.
Once you are approved for a credit card after bankruptcy, be sure that you use it carefully, perhaps only charging for necessary living expenses like gas, groceries and prescriptions rather than making unnecessary impulse purchases. It is important to watch yourself closely so as not to fall into the same spending habits that may have caused the bankruptcy in the first place. Nonetheless, a credit card after bankruptcy can be a great way to spend responsibly and rebuild credit after bankruptcy at the same time.
Another popular payment card option for people who have suffered from bankruptcy woes is a prepaid debit card. These cards allow the user to spend only up to the amount they have deposited in advance onto the card, making prepaid cards an excellent choice for consumers that are looking to control their spending or re-training themselves to budget carefully.
Regardless of which type of credit card after bankruptcy you choose, avoid applying for too many credit cards after bankruptcy at the same time. Multiple bankruptcy credit card applications make you appear desperate for credit and can hurt your credit score. Here is a link for some credit card after bankruptcy options you may want to explore, if you must have a credit card after bankruptcy:
http://www.creditcards.com/bad-credit.php