Bankruptcies Are Up: Can Consumers Rebuild by Getting a Credit Card After Bankruptcy?

The number of bankruptcies in the United States continues to climb year after year in some states. In some states, like Wyoming, the number of bankruptcy filings continues to rise each month. In fact, there was a 60 percent increase in filings from 2008 to 2009. Unemployment, foreclosures and rising expenses are to blame.

In Phoenix, Arizona, 1800 bankruptcy filings occurred in January of 2010, which is a 52 percent increase from January of 2009. However, there is some hope across the country. While filings were up year over year, they are starting to fall from one month to the next.

For example, in Phoenix, that 1800 was the lowest number since February of 2009 and it was the smallest year over year increase since September of 2007. Across the country, the number of bankruptcies fell by ten percent, according to the American Bankruptcy Institute.

As you can see, the numbers are still bad. Yet, once you go through the bankruptcy process, there is a new light to look towards. You can rebuild your credit score and your financial future. In fact, you can even get a credit card after bankruptcy to help you through the process.

You should know a few things before you actually start investing in credit again, after filing bankruptcy.

• Lenders are unlikely to offer you exceptional offers for some time, at least until you build your credit score back up again. Make it your goal to work towards these goals.
• You can obtain secured credit cards soon after filing, even within six months. These credit cards have a credit limit secured by the deposit that you make on them. For example, if you secure the credit card with a $1000, your credit limit is then $1000. Look for those secured credit cards that do report to the credit bureaus. Make payments on time and avoid going over your limit. This can help you to rebuild your credit.
• Within 12 to 18 months of your bankruptcy discharge, credit lenders may start making offers to you. At this point, you can begin looking for credit cards for bad credit, too. Be careful with these credit cards. Most of them have a very low credit limit and high fees, including costly membership fees. Nevertheless, use one or two of them to help you to rebuild your credit over the next year or so.

Once you get to this point, you will find that obtaining a credit card is easier to do. However, bankruptcy remains on your credit report for up to ten years.

During that time, any lender who wishes to provide you with a line of credit will be able to see that you have filed in the past. For that reason, ensure that you are continuously working towards improving your credit score each month.

• Pay debt down rather than carrying it.
• Focus on using credit cards minimally, but do use them to establish a history.
• Avoid closing any other credit lines you may have even if they have a negative history. This establishes your credit history and is critical.
• Make your payments on time.

Bankruptcy is an opportunity to start fresh. You can do that by focusing on choosing the right credit card after bankruptcy and then using it wisely.

Aubrey Clark is an Author and editor for Direct Banc, which features the web’s best collection of  Lowest Interest Rate Credit Card and a wide selection of credit cards for average credit.