People have a number of misconceptions about the bankruptcy process that often result in a reluctance to pursue bankruptcy when financial problems arise. One of the most common misconceptions about bankruptcy is that a debtor cannot purchase anything on credit after a bankruptcy discharge. The truth is that many debtors are able to purchase on credit immediately following the discharge in a chapter 7 bankruptcy.
Whether you decide to file a chapter 13 bankruptcy or a chapter 7 bankruptcy, the first step is to file a bankruptcy petition. Along with the petition, you will also need to prepare and file with the bankruptcy court a set of bankruptcy schedules, statement of financial affairs, a creditor matrix and a means test. The bankruptcy matrix is a list of the names and addresses of all of your creditors. Legally, you are obligated to include all of your debts on your bankruptcy schedules. If you owe have a balance on a credit card, that is considered a debt which must be included on your bankruptcy schedules. Technically, if you have a credit card with no balance, then it is not a debt. All creditors included on the matrix will be notified that you filed bankruptcy by the bankruptcy clerk’s office sending them a notice from the bankruptcy matrix that you filed with the court.
Our office has discovered that even if no debt is owed on a credit card, that creditor will also receive notification of your bankruptcy filing through credit bureaus and other internet notifications. However, if you file a Chapter 7 bankruptcy case, you will receive offers for new credit cards shortly after your case is filed. Although we like to encourage our clients to try to avoid use of any credit cards after their case is filed, having a credit card is many times very necessary these days. You must have a credit card to rent a car, purchase an airline ticket, reserve a hotel room etc. We therefore advise our clients to accept one of these post bankruptcy credit card offers, charge a tank of gas, and pay the bill off immediately upon receipt. This act will help improve your credit rating quickly. However, paying that debt late will negatively affect your credit, which is obviously not good on top of a bankruptcy filing. These cards typically have a high interest rate. However, several months of payment in full on time will enable you to qualify for lower interest rates in the near future.
Check with your Texas bankruptcy attorney for answers to specific questions regarding credit after bankruptcy.