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Credit Cards Could Help Rebuild Credit After Los Angeles Bankruptcy

By Encino Bankruptcy Attorney on February 15, 2012

One of the more popular myths about bankruptcy in Los Angeles is that a person who files won’t ever be able to get credit.

That’s simply not true. Los Angeles bankruptcy lawyers have seen clients get credit card offers just after the bankruptcy process is completed.

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Think about it — when a person has piles of debt they are trying to pay off‚ but are getting behind in payments‚ they are a high risk for lenders. But when all that debt is cleared‚ suddenly‚ that person is a more desirable borrower because he or she isn’t being forced to make those payments anymore.

Filing for bankruptcy can actually go a long way toward repairing credit. While the main effect of bankruptcy is obvious — debt relief — there are other benefits that consumers get from going through with the process. One of the most helpful is credit repair.

Some consumers who are behind on credit card payments don’t realize how badly their credit score has been hit by late and missed payments. Typically‚ people who are having debt problems aren’t going to pay the fee or take the time to see what their credit score is.

For many‚ they recognize it’s probably much lower than they would want. For others‚ they simply don’t realize how much their score is being hurt by their debt problems. They believe bankruptcy will hurt their credit score‚ but don’t know that their credit score is already in trouble.

What bankruptcy also does is allow a consumer to get the debt relief needed and still prepare a plan to improve their financial situation for the future. Bankruptcy provides just enough help to put this plan into action.

Now‚ as Fox Business reports‚ there are some credit cards that could help people get their credit scores improved in 2012. While consumers should be careful about using credit cards‚ especially right after bankruptcy‚ using them appropriately could actually help your financial situation.

Prepaid debit cards

As banks continue adding fees and trying to squeeze as much money from customers as possible‚ credit card companies often do much of the same. They require people to have the disposable income up front to put on these cards and payments don’t actually get reported to credit bureaus. If you are hoping to build credit‚ this isn’t the way.

Secured credit cards

However‚ some experts believe that secured credit cards can be a helpful tool to rebuilding credit. These cards‚ the article suggests‚ can teach a consumer how to save and spend money strategically. Major lenders offer secured cards with low annual fees‚ but the consumer must put a certain amount of money into a linked CD. That deposit is the line of credit.

Unsecured credit cards

As stated above‚ many consumers get bombarded with credit card offers right after bankruptcy has ended. Many of these offers come with high interest rates‚ though‚ so it could be best to start with a secured card and graduate to a better-rate unsecured card‚ which best helps improve a credit score.

The bottom line through all of this is that credit repair is an important aspect of post-bankruptcy life. But allowing predatory lenders to charge high interest rates and hidden fees can put a person in debt once again. It is important to be careful and get sound advice when trying to rebuild credit after bankruptcy.

Nader‚ Naraghi & Woodcock‚ APLC will provide a free consultation to help guide you in making a decision that works for you. In Encino‚ Glendale‚ and San Fernando Valley‚ just call (800) 568-0707.

Additional Resources:

Best credit cards for rebuilding credit in 2012‚ by Curtis Arnold‚ CardRatings.com


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