Can You Get A Credit Card Before Discharge?
The world of credit is often confusing, and that is why it can be so easy to get yourself into a spot of bother. The financial decisions that you make can have a huge impact on lots of different areas of your life.
If you eventually have to file for bankruptcy, then this can really make life difficult. Especially if you have to apply for further credit in the future.
While you are bankrupt, it is incredibly difficult to get any credit. That is why you might be desperate to be discharged from bankruptcy in order to get yourself a credit card.
But, if you are desperately in need of credit, you might be wondering if you can apply for a credit card while you are still bankrupt. In this guide, we’ll be taking a look at whether, or not, this is possible, and lots more. So to find out, keep on reading.
What is Bankruptcy Discharge?
First things first, let’s take a look at what bankruptcy discharge is. When you are declared bankrupt, this comes with restrictions. These restrictions are a result of the debts that have led to your bankruptcy, and they will affect credit and your working life.
The restrictions themselves will include things such as applying for credit over a specific amount, becoming a director of a business, and other things in these categories.
If you do anything to break these restrictions, then you will be breaching your bankruptcy.
When you are discharged from your bankruptcy, these restrictions will no longer apply to you. That is because your personal liability for the debts that led to your bankruptcy will be written off.
You will become debt free, and you will then be able to apply for credit, and do all the other things that your bankruptcy was preventing you from doing. Typically, you will remain bankrupt for at least 12 months, but after this, you could be discharged from it at any point.
But, it is important to note that once you are discharged from your bankruptcy, you will only be freed of the debts that were included in your bankruptcy. Any debts outside this will not be written off.
What Happens After You have Been Declared Bankrupt?
If you are struggling financially, then you might choose to file for bankruptcy. If you haven’t done this before, then you might not really know what to expect.
What happens next will depend on the type of bankruptcy that you file for, there are 2 main types. They are chapter 7 and chapter 13 bankruptcy.
There is one major difference between these two, and that is liquidation. With chapter 7 bankruptcy, you will have to sell off some of your own possessions and assets in order to repay the debts.
You will not have to repay the whole amount that you owe, but you will have to satisfy at least a portion of it before you can file for bankruptcy. There are some exemptions from what will be liquidated, so some of your possessions will be protected.
Even if you file for chapter 7 bankruptcy.
Alternatively, if you file for chapter 13 bankruptcy, then you won’t have to worry about satisfying any debts. Instead, your debts will be organized specifically so that you can pay them off over a set number of years. Usually 3 to 5 years. It is important to consider what type of bankruptcy you file for because this will impact when you can apply for a credit card.
Can You Get A Credit Card Before Discharge?
As we have said, when you will be able to apply for a credit card after bankruptcy will depend on the type of bankruptcy that you filed for. This is because of the differences between chapter 7 and chapter 13 bankruptcy.
Chapter 7 bankruptcy typically lasts for around 12 months from the date that you are declared bankrupt. But, chapter 13 bankruptcy can last a lot longer, with many payment plans spanning up to 5 years.
That is why the time in which you can apply for a credit card differs. If you have filed for chapter 7 bankruptcy, then you will not be able to apply for a credit card until after you have been discharged from your bankruptcy.
However, if you have filed for chapter 13 bankruptcy, this will differ. If you have filed for chapter 13 bankruptcy, then you might be able to apply for a credit card while you are still technically bankrupt.
But, you will need to have your trustee’s approval to do this. But, just because you can apply doesn’t mean that you will be accepted. After all, a lot of lenders will avoid those with poor credit histories when offering credit cards. Even secured credit cards.
When Will You Be Able to Get A Credit Card After Discharge?
Once you have been discharged from your bankruptcy, then it is likely that you might find yourself looking to apply for a credit card. Especially if you filed for chapter 7 bankruptcy and had to liquidate your assets as part of the deal.
As soon as you have been discharged from your bankruptcy, then you will be able to apply for your credit card right away. However, just because you can apply does not mean that you will be accepted.
As we have said, a lot of the time, lenders will avoid giving credit cards to those with poor credit histories. Especially those with bankruptcies in their past.
So, just because you can apply for a credit card again, doesn’t mean that you will get a credit card. But, if you want to increase your chances of getting accepted for a credit card, then you should apply for a secured one.
In short, you will only be able to apply for a credit card before you have been discharged from your bankruptcy if you filed for chapter 13 bankruptcy, and have the approval of your trustee.
But, if you file for chapter 7 bankruptcy, then you will not be able to apply for a credit card until after you have been discharged.