in Oklahoma secured credit cards in bankruptcy are treated a little different than unsecured credit cards. Filing for bankruptcy is a tough decision, but it may have felt like your only option at that time. While bankruptcy allows you to start fresh, it can impact your credit and make moving forward somewhat challenging. But in some cases a bankruptcy could be the best way to actually start rebuilding your credit with a fresh financial start. You may wonder what to do next. To learn more about life both after and before bankruptcy and raising your credit score, continue reading this article below.
What’s A Secured Credit Card?
secured credit cards in bankruptcy are cards that you paid for upfront. Most credit cards extend you a line of credit, and they trust you to pay it on time. If you fail to pay off your credit in a timely fashion, there’s not much a credit lender can do other than report your missed payments and send your account to collections. Few lenders are comfortable extending a line of credit to people with low credit scores. Thankfully, it’s much easier for people to get a secured credit card than an unsecured credit card (one that doesn’t require payment upfront).
To get a secured credit card, you give the lender a cash deposit. Typically, the lender decides how much or little the deposit will be. If you fail to make on-time payments, your lender simply subtracts that money from your deposit and uses it to pay off your monthly balance. Also, your line of credit will never be more than your cash deposit, so you won’t have to worry about accruing debt. For example, if you pay $1000 to get a secured credit card, your lender will only extend $1000 worth of credit.
It Helps Rebuild Your Credit
If you filed for Chapter 7 bankruptcy, it could remain on your credit report for ten years. If you filed for Chapter 13 bankruptcy, it could stay on your credit report for seven years before it falls off automatically. Once you file for bankruptcy, your credit score goes down depending how low it is when you file. A low credit score negatively impacts your chances of renting an apartment, renting, buying, or leasing a car, and securing a home. Thankfully, a secured credit card helps rebuild your credit score during your bankruptcy.
For your secured credit card to raise your low score, you must make on-time payments. Your lender should report your timely payments to major credit bureaus, and your credit score will increase in due season. But bear in mind that a secured credit card is like any other credit card. If you don’t pay on time, your credit will continue dropping. It doesn’t matter that you put money upfront that the lender can pull from if you miss or are short on a payment. You’re still obligated to pay the card’s monthly minimum.
If you need more information regarding how to repair your credit after filing bankruptcy or how bankruptcy will impact your future credit score, call Kania Law Office today for a free consultation at (918) 743-2233 or contact us online.