Can I Still Use My Credit Cards After a Bankruptcy?

credit cards in hand

Filing for bankruptcy is a decision that no one should take lightly. Bear in mind that there are plenty of alternatives to bankruptcy in most cases. You can learn about different financial options by talking to a bankruptcy attorney in your area. If, however, you and your attorney determine that a bankruptcy filing is in your best interest, you will then undoubtedly  have a number of questions about “Life After Bankruptcy.”

The most important thing to keep in mind is that life after bankruptcy will include a hugely reduced pile of unpaid debt! The fact that you are able to discharge your unpaid debt if you’re struggling to stay afloat financially is simply amazing. Bankruptcy can be a life saver to so many debtors who are severely behind on their bills, with no end in sight.

There are only a few things that cannot be “wiped clean” with a bankruptcy filing. At this point in time, overdue student loans are not dischargeable via bankruptcy. Although this can be very frustrating if you have gigantic outstanding student loan bills, there are things that you can do (with the help of your attorney) to make repaying your student loans easier.

If you owe child support arrears (overdue payments that remain unpaid), they cannot be discharged via bankruptcy, either. This policy is in place to keep parents from filing for bankruptcy simply to “get out of” paying child support. To discharge child support would be taking money away from children who need and deserve financial support in order to thrive and succeed in life.

Things that absolutely can be discharged by filing for bankruptcy include your past due utility bills, rent, mortgage, car payment, auto insurance, health insurance, doctors’ bills, personal loans, car accident claims, business debts, civil court judgments, tax penalties, and credit card charges.

The most common type of debt that people are interested in discharging is credit card debt. When living above your means, using a credit card can seem like an easy answer to a paycheck that falls short. Simply charging a few things here and there can feel like no big deal, as it’s “just until you get back on your feet,” or “while you wait for your raise at work.” All too often, credit card usage just gets out of hand, and with high interest rates, even your minimum balance due each month can quickly become more than you can afford.

Because of the above scenario, credit card balances are the most common debt that brings people to their attorney’s office, asking for help filing for bankruptcy. The great news is that all of your credit card debt can and will likely be wiped out when your bankruptcy case is filed!

A common question asked by debtors who are thinking about filing for bankruptcy is, “Can I still use my credit card(s) after I file?” The answer to this is a resounding NO. By filing for bankruptcy, you are giving up the right to charge any more debts to your credit cards. Your credit card company will close your account as soon as they get notice of your bankruptcy, and this includes cards with a zero balance. Your lifestyle of charging everything to your credit cards will have to stop when you decide that bankruptcy is in your future. Although this may feel scary to some people, it’s important to remember that you will have more disposable income post-bankruptcy since many of your debts will be gone. This means that your need to use a credit card will also disappear! In order to prevent yourself from falling into debt again, stick to paying with real money by making a budget.

Image credit: Mighty Travels

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3 Responses to Can I Still Use My Credit Cards After a Bankruptcy?

  1. Pingback: I’m too Embarrassed to File for Bankruptcy! | Veitengruber Law

  2. Pingback: Planning to File for Bankruptcy: Can I Still Take a (Pre-Paid) Vacation? | Veitengruber Law

  3. Pingback: Secured Credit Cards: 101 | Veitengruber Law

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