Credit card issuers fear bankruptcy, because consumers often can wipe out or reduce unsecured debt, depending on whether they file for Chapter 7 or Chapter 13 bankruptcy. However, once a consumer wins a bankruptcy discharge, his credit profile often looks better to lenders. Your credit score may take a significant hit, but since you can't file for bankruptcy again for years, creditors know you can't use bankruptcy to erase your debts.
Chapter 7 bankruptcies generally are completed in about 90 days. Because unsecured debts generally are discharged, your debt-to-income ratio improves quickly. If you want to get bankruptcy over with quickly, that's your best option. Chapter 13 allows you to reorganize your debts and repay obligations over a three- to five-year period. This means you'll be mired in bankruptcy for longer, but because it shows more of a commitment to paying obligations, it may look a little better to lenders. You can't have debt discharged in a Chapter 7 bankruptcy for eight years once you've completed the process. The waiting period between Chapter 13 discharges is at least two years. In either case, lenders know your options for relief are more limited.
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Secured Credit Cards
A secured card may be your best bet to rebuild your credit in the short term. With a secured card, you provide the issuer with an initial deposit that the bank retains as collateral. You then receive a credit line that's generally equal to the amount of the deposit. As long as you pay your monthly bills as agreed, that original deposit doesn't get touched; it's only used if you fail to settle your obligation. Because that reduces the risk to the issuer, a secured card generally is easier to get, and as long as the activity is reported to the credit bureaus, it can help you rebuild your credit score.
Unsecured Credit Cards
It might take you longer to get approved for an unsecured card, but not much longer. Those who have discharged their Chapter 7 bankruptcy often see unsecured credit card offers in their mailbox within a few months, if not sooner. Be prepared for lower credit limits and higher interest rates and annual fees than you had in the past. Rather than accepting the first offer that comes your way, check with your credit union or bank. It may be willing to offer you better rates if you've managed your checking and savings accounts well and avoided numerous overdrafts.
Getting a retail or gas card isn't always easier than an unsecured card, because many of the same issuers are making the credit decisions. Citibank, GE Money Bank, Chase Bank, HSBC and World Financial Network National Bank handle most of the credit accounts for consumer stores. Your timeline for retail cards is similar to that of unsecured cards: In general, you'll start getting offers and approvals a few months after you complete bankruptcy. However, you may be able to get cards approved with low limits relatively quickly, because merchants know you're not a risk to escape the debt through bankruptcy again for years.