There is no question that bankruptcy can have a negative impact on debtors’ credit scores. Once a bankruptcy is discharged, however, people are encouraged to begin rebuilding their credit scores. At The Law Office of Douglas J. Powell, PC, we know that one of the most common ways people can enhance their credit report is to obtain a credit card. However, there are some important things people should keep in mind when rebuilding their credit.
Although some credit card companies may deny applicants who have a bankruptcy on their record, there are some companies that are designed to help people who have credit issues. These are often referred to a subprime credit cards, as the interest rate on these cards may be higher or they may charge expensive fees in order to use the card. Debtors should beware that when obtaining a subprime credit card, they should remain cautious in order to avoid accumulating debt on their newly clean financial slate.
While these credit cards can strengthen a debtor’s credit report if they are able to pay off the balance of the card each month, people can easily be diverted into a heavy debt situation if they are not careful. Approximately 58 percent of the cards’ revenue comes from annual fees, maintenance fees, authorized user fees and processing fees. To people who have just emerged from extensive debt and who are learning how to stick to a budget, credit and fees can be a dangerous road to traverse.
To learn more about credit card debt and bankruptcy, visit our page on Chapter 7 debt relief.