While no one likes to admit defeat, sometimes our debts simply get the better of us and bankruptcy may become the only option for a better financial future. Unfortunately, your credit will see lasting negative impacts from a bankruptcy, but you can repair your credit with some hard work — and a lot of patience.
One of the first steps you should take after your bankruptcy is complete is to check all three of your credit reports. Make sure all of the accounts that were affected by the bankruptcy accurately reflect their new status, or have been properly removed.
The next step is to start rebuilding your credit. A big bankruptcy myth is that you will only be able to qualify for a secured credit card after bankruptcy, but that’s not always true in today’s credit market. Some lenders, particularly subprime lenders, will consider post-bankruptcy applicants for unsecured cards. So, when it comes to obtaining credit cards after bankruptcy, the options may not be as narrow as many people believe. Begin your search with our expert-rated picks below, which includes unsecured and secured card options.
Unsecured Cards (4) | Secured Cards (6) | Bankruptcy Basics
Top Unsecured Credit Cards to Apply for After Bankruptcy
The major reason many prefer unsecured credit cards to secured cards is, really, the major difference between the two: the deposit. A secured credit card is secured by the deposit you put down, and, in most cases, that deposit will set your credit limit. An unsecured card requires no deposit but may have more stringent requirements.
- All credit types accepted.
- Arro's soft credit pull does not impact your credit score.
- Through in-app personal finance activities, members receive real time credit limit increases and other rewards.
- Opportunities to decrease your interest rate.
- Use your Arro Card anywhere Mastercard is accepted.
- Application takes as little as 5 minutes.
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Intro (Purchases)
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Intro (Transfers)
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Regular APR
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Annual Fee
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Credit Needed
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N/A
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N/A
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16% Variable
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All Credit Types Accepted
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+See More Unsecured Credit Cards
One good way to see if you may qualify for a particular card before going through a hard credit pull is to check for pre-qualification offers. Most issuers offer a pre-qualification process that usually involves a soft credit pull and won’t affect your credit score.
While being pre-qualified for a specific credit card won’t guarantee you’ll be accepted if you apply, not being pre-qualified can be a sign that you may not meet the card’s requirements and should consider waiting before you apply.
Top Secured Credit Cards to Apply for After Bankruptcy
If you don’t qualify for an unsecured credit card or prefer setting your own credit limit through a deposit, secured credit cards are a great option. Because the card is secured by your deposit, there is less risk to the issuer should you become unable to repay your balance. As a result, secured credit cards tend to have very flexible credit requirements, meaning almost anyone can qualify for a secured card.
+See More Secured Credit Cards
One of the reasons secured credit cards can be preferable to unsecured cards is the ability to obtain a much higher credit limit. Unsecured cards for poor credit tend to cap limits in the low hundreds of dollars, while some secured cards offer the ability to obtain a credit limit as high as $5,000 so long as you can make a deposit of that amount.
A high credit limit can be very helpful for your credit score, especially if you tend to make large or frequent purchases. That’s because your utilization rate, or the ratio of available credit to debt, can be worth up to 30% of your FICO credit score. A higher credit limit can help you maintain a lower utilization rate, which is better for your credit score.
Bankruptcy Basics
Bankruptcy is a last-ditch option for those overwhelmed by debt. The actual financial effects of bankruptcy proceedings depend on the type of bankruptcy declared, but can include debt forgiveness or moderated repayment. For individuals, the most common types of bankruptcy are Chapter 7 and Chapter 13.
Regardless of which type of bankruptcy you declare, be prepared to face credit damage. Furthermore, a bankruptcy discharge can live on your credit report for seven to 10 years from the filing date (depending on whether you file Chapter 13 or Chapter 7 bankruptcy, respectively).
Obtaining a Bankruptcy Discharge
A bankruptcy discharge is the goal of the bankruptcy process and is the actual legal order that says you are no longer obligated to pay any discharged debts. Once discharged, creditors holding a debt may no longer attempt to collect on that debt, either by mail, phone, or in person.
Each debt being considered for discharge has a fixed time during which a complaint objecting to the discharge may be filed. If there is no litigation objecting to the discharge, debtors will generally receive a discharge automatically.
Chapter 7 vs. Chapter 13 Bankruptcy
For the most part, the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy is a matter of scope and qualification. Under Chapter 7 bankruptcy, many of your unsecured debts can be completely wiped out, including credit card debt and medical bills. When you file for Chapter 13 bankruptcy, you’ll be required to pay back some portion of your existing debt.
Since Chapter 13 bankruptcy involves paying off your debts over time, you won’t receive a final discharge until all payments have been made under the plan, which can take between three and five years. In contrast, Chapter 7 is much faster, with complete discharge typically being reached within six months.
All that being said, not all debtors can qualify for Chapter 7. If you make too much money and/or have too much disposable income, you may not be able to file Chapter 7. Additionally, if you want to maintain ownership of any property or other collateral used for a secured debt, including real estate and automobiles, you should choose Chapter 13 bankruptcy.
Rebuilding Your Credit After Bankruptcy
Though your debts may have gotten the better of you, recovering from a bankruptcy is possible. No matter which road you take through the bankruptcy process, the key to rebuilding your credit afterward is patience. While you typically won’t need to wait the full seven to 10 years for your credit score to rebound, you likely won’t see a 700+ score for at least a couple of years after your bankruptcy is complete.
Rebuilding your credit will require you to demonstrate healthy financial habits, including the ability to maintain credit accounts — in good standing — over a period of time. Don’t apply for a dozen credit cards hoping to boost your credit quickly — this will backfire. Stick to one or two cards, use your credit modestly, and pay off any debts in full each month. If you are diligent, you will be able to see your credit improve over time.
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