A credit card after bankruptcy? Let’s take a look at what bankruptcy is about and what affects it will have on getting credit cards, mortgages and other credit.

Declaring bankruptcy can be a great tool if you find yourself drowning in debt. Bankruptcy is meant to help people who just cannot find another way out. It allows you to use all of your assets to pay back as much as possibly can over a set number of years and then start anew. When you declare bankruptcy, you free yourself from creditor and collection agency phone calls and have the chance to start over again with a fresh slate.

Well, almost. When you declare bankruptcy, it appears on your credit history that you took this action. Bankruptcy means that your lenders probably did not get back all of the money you owed them. Therefore, if future lenders see that you have declared bankruptcy in the past, you are considered to be a very high-risk candidate, because you might not have changed. Getting credit such as a credit card, car loan or mortgage loans after bankruptcy can be especially difficult, but there are ways to go about doing it.

The bankruptcy won’t have a direct effect on a credit card that had nothing owed on it prior to the bankruptcy but don’t bank on keeping it. You may lose the card because the credit card company may cancel your account as a precautionary measure. It’s not a good idea to get started right away with bank cards again anyway. That’s one of the things that get people in trouble to begin with.

After bankruptcy, building up credit-good or bad-takes time. If you declare bankruptcy, you effectively wipe out your credit history, and that includes any good credit you may have as well. Therefore, you’ll be starting from scratch. A young adult is often considered a high-risk candidate because he or she has little credit history. You too will be considered a high-risk candidate because of your troubled history.

It will be possible to get a mortgage loan after bankruptcy. Though you can explain until you are blue in your face to your lender about how you’re going to change, a more effective way is to prove it. Build up your good credit again, and in 18 – 24 months you should be able to qualify for a mortgage loan similar to what you would have had if you had not filed bankruptcy.

You can also use special government programs to help you get a mortgage. Some will work with you to put less money down on your new home and to convince a lender that you should qualify, even if you have declared bankruptcy in the past. If you have a solid income now and are working to pay off debts, you can probably qualify for some of these government programs.

You can also use your current home as equity to convince a lender that you should qualify. The less money you want to borrow, the less risk you are to a lender. Therefore, if you can pay for the majority of your new home by selling your current home, your lender will be more likely to overlook the fact that you’ve declared bankruptcy in the past.

Other credit is available to the recently bankrupt. However, you’ll find that there will be some tough restrictions. Those will include lower credit limits and higher interest rates.

The real lesson here is that bankruptcy should not be declared lightly. You need to make absolutely sure it is the best option for you. Bankruptcy should be your last resort financially, because it will make it difficult to do things like get a mortgage and other credit or even a credit card after bankruptcy.