February 17, 2012
/24-7PressRelease/ -- You have filed a
bankruptcy and are about to receive the "fresh start" Congress intended. Free of debt, you can begin your financial life again with a clean ledger. You have cancelled all of your credit cards that you had before your bankruptcy. Now you realize that you need a credit card for some things. How do you go about choosing and using a credit card after your bankruptcy?
Credit Cards are Easy. Too Easy.
Credit cards are convenient, they allow you to avoid carrying a great deal of cash, and they are essential for ordering online, booking a hotel or buying an airline ticket. They can also be an anchor around your financial neck, dragging you down to economic ruin.
You can easily buy things with them, and if you have had financial difficulties, perhaps too easily. You pick up a Starbucks coffee on the way to work, buy lunch, stop on the way home and do some shopping, grab a few "extras" and order a pizza once you get home. Do it one day and it might be okay...do it for a month and you're in trouble.
One Card. No Balance.
After a bankruptcy you will probably receive numerous credit card offers. This is not because the lenders suddenly believe you are a good risk; they hope you will spend with abandon and carry a significant balance, because they know you cannot file another Chapter 7 bankruptcy for years, and they will have you on the hook for all of those interest charges.
The most important rule to follow after a bankruptcy is controlling your spending. No matter how much you make, you can always spend more. One way to do that is to limit your use of credit cards. Only have one card.
This allows you to understand the "fine print" for your credit agreement. Make certain it has a no interest "grace period." Know when the payment is due, know what the late fees are and any other charges that may apply. And, never carry a balance.
Handle With Care
Only charge what you can pay off every month. Immediately after the bankruptcy, you may want to avoid having a credit card, to allow yourself time to learn good money management skills. Create a budget, pay or set aside money for your rent and food costs, and calculate how much "spending money" you have.
Take that money and place it in envelopes and however much is in that envelope is what you have to spend for the week or month. Once you feel comfortable with that process, you can apply for a single card and use it only with care and discretion.
If you have questions about the bankruptcy process or about life after bankruptcy, speak with a bankruptcy attorney.
Article provided by Charles M. Sabo, P.C.
Visit us at
www.charlessabo.com/---
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