To put it simply, your credit card debt can get so large that it prevents you from paying your day-to-day living expenses. In Massachusetts, a Chapter 7 bankruptcy case will usually get rid of your credit card debt, while still protecting your property and most of your other needed possessions.
In most Massachusetts bankruptcy cases, credit card companies will not allow you to keep your credit cards after bankruptcy. There is good news, though; since after you file and your bankruptcy is finalized, you can immediately start rebuilding your credit.
After discussing your case details thoroughly with your credit card debt attorney, you may want to work with your lawyer to exclude some debt from your bankruptcy filing. Possibly a credit card used for work, a financed vehicle, or for certain expenses the filer deems necessary. Most of the things you and your Plymouth bankruptcy attorneys include in your filing will have to be approved by the courts. This decision may depend greatly on the way they are presented and the professional advice and presentation of your credit card debt relief attorney.
It is vital that when you file, you gather and list all your debt, no matter how small or large or how vital the credit card might be to the filer. Simply put, if you owe a creditor money, they must be listed on the bankruptcy petition. Even if you don’t owe a balance on your credit card, you must still list it in your bankruptcy filing. A revolving credit card account is a type of contract, and your contracts are automatically canceled through bankruptcy. These contracts include credit cards, leases, secured auto loans, and more.
Once your credit card company or any other creditor finds out about your bankruptcy, that contract is usually always canceled. The credit card company has no way of enforcing any further monetary obligations. Therefore, they will cancel the entire contract.
It’s especially important to note that all bankruptcy filings and decisions are personalized to your financial situation. Bankruptcy is designed to help you get back on your financial feet, not ostracize you. Just because your credit card payments are late, does not mean you didn’t pay other more pressing bills. The Massachusetts courts consider all aspects of your filing and know that you need certain possessions to survive. Your financed vehicle, for example, is something you cannot do without. Your attorney will work with the court to help you successfully turn your finances around, while enduring the least amount of hardship.
Can I Get Credit Cards or New Credit After Bankruptcy?
Again, the simple answer is yes you can. Once your bankruptcy has been finalized, you are essentially opening a new, clean financial slate for yourself and your family. There are things, though, that will be necessary moving forward.
- Make sure your credit report accurately describes your bankruptcy: This may seem like something you don’t want to do, but it helps. Your credit report should show a $0 balance for any accounts that have been discharged through bankruptcy. Raise a flag with the credit reporting agency if any of your discharged debts are shown as active and get it corrected.
- Keep paying non-discharged debts on time: Sometimes, most likely not all your debts will or can be discharged by your bankruptcy—like in the case of student loans. Make sure you pay the remaining balances on time.
- Avoid credit repair companies: Some companies claim they can remove a bankruptcy from your credit report. This is simply not true. They will most likely take your money and you’ll get little or nothing in return.
- Get new credit: Securing new credit is one of the biggest hurdles to get over in post-bankruptcy credit repair, but it’s also one of the most critical steps to rebuilding your credit. Some credit cards approve applicants who have a bankruptcy because they know that by law, you can’t declare bankruptcy again for at least another seven years or more.
There are many retail, gas cards, and secured cards that tend to have lower qualification standards than other unsecured cards. These loans and cards unfortunately will come with more restrictions and higher interest rates than you could get with better credit. You can still usually obtain them and successfully open the door to start rebuilding your credit reputation.
After My Debt Is Erased, What Other Steps Can I Take to Rebuild My Credit?
Even though you may lose all your credit cards, and possibly other forms of secured and unsecured loans during bankruptcy, you are almost always able to secure other forms of financing after filing. This can sometimes be done far sooner than you may think. This might surprise you, but there are definite reasons for this. Once the bankruptcy is complete, the filer is free of debt and ready to rebuild his or her credit. A professional credit card debt lawyer, with experience in credit repair, can always help.
Why exactly is this a good time to take on new debt? There are reasons for this, such as:
- The filer now has more discretionary income to spend, and creditors know this and want the business.
- Most filers learn from this experience and use their new credit much more cautiously and for less frivolous purposes. Creditors might deem you a better risk after a bankruptcy, since they know you do not want to go through that process again, having become more prudent in handling their credit.
- In Massachusetts, the filer cannot file for another seven years (or more), so the creditor has lots of time to initiate action against him or her if needed.
The bankruptcy process may seem overwhelming and complicated, but your professional Plymouth, Hyannis, or New Bedford credit card debt attorney will guide you. Bankruptcy is a process designed to help you, the consumer. Your bankruptcy attorney can get you and your finances back on track.