Key takeaways

  • Applying for a credit card can be an effective way to start rebuilding your credit after a bankruptcy, but you must wait until your bankruptcy is fully discharged to apply.
  • Depending on the type of bankruptcy filed, it could take as long as five years for it to be discharged.
  • There are several credit card options available to people post-bankruptcy, though many will be secured cards that require a deposit to establish your line of credit.

If you find yourself in serious financial straits, bankruptcy can be a viable option under the right circumstances, including Chapter 7 or Chapter 13 bankruptcy. In fact, filing for bankruptcy has become more popular lately, with Chapter 7 filings up 26.8 percent and Chapter 13 filings up 48.4 percent from two years ago, according to the American Bankruptcy Institute.

After a bankruptcy filing, the task of repairing your credit begins. But how soon can you apply for new credit? It depends on the type of bankruptcy you filed and how quickly your bankruptcy is discharged. This can take as little as six months or as long as five years. Learn more about the different types of bankruptcy available, when you can apply for new credit cards after bankruptcy, how to rebuild your credit and more.

Types of bankruptcy

There are two types of bankruptcy for most consumers:

  • Chapter 7 eliminates almost all debt with no payback required. Exceptions include student loans, back child support and IRS debt.
  • Chapter 13 — sometimes called a “wage earner” plan — is a reorganization of debt. This type requires some repayment over time based on your disposable income (per tough IRS guidelines) and the amount of debt you have.

Most consumers in crushing debt prefer a Chapter 7 bankruptcy that liquidates nearly all debts and allows for a fresh start. However, qualifying for Chapter 7 requires you pass a “means” test that assesses whether your income is over the median for your state as well as how much disposable income you have.

Chapter 7 is the most efficient but also the most damaging form of personal bankruptcy. It remains on your credit report for a full 10 years. However, once Chapter 7 has been filed, it is usually discharged (completed) in four to six months. So, while Chapter 7 has a longer period of damage to your credit report, it offers the shortest time to when you can begin repairing your credit.If you don’t qualify for Chapter 7, you may have to take a Chapter 13 bankruptcy. This chapter requires repayment of a portion of your debt over three to five years. Chapter 13 will remain on your credit report for seven years from the filing date and is not discharged until your debt is paid off. Getting conventional credit or loans during this time is very unlikely.

Note that there are other forms of bankruptcy available besides those geared to consumers, including, among others, Chapter 11 for businesses, Chapter 9 for municipalities and Chapter 12 for family farmers or fishermen, according to U.S. Courts.

Applying for credit cards after bankruptcy

Applying for credit after a bankruptcy will be an important step in rebuilding your credit profile, but doing it before you have a good grasp of your finances won’t help you..

How long after bankruptcy can you get a credit card?

A federal bankruptcy court must discharge your bankruptcy before you can apply for a new credit card. Your credit report will bear the mark of the bankruptcy for many years after the discharge, but that doesn’t prevent you from applying for credit as long as your bankruptcy is discharged.

A Chapter 7 bankruptcy can take around four to six months to be discharged, according For Chapter 13 debt to be discharged, expect to wait at least six to eight weeks after the final payment is made on your three- to five-year court-approved repayment plan.

But even after your debt is discharged, the timing of applying for new credit must be right for you. You may want to delay applying for a new credit card until your personal finances are in order and you determine that you can afford to punctually and consistently repay any new credit card charges.

Before applying for new credit, make a game plan to handle any new debt you take on. Don’t get trapped again by letting out-of-control debt sneak up on you. The credit counseling required for filing and discharging bankruptcy can help you put together a credit management plan that works for you.

What cards can you apply for after bankruptcy?

Be forewarned: Some credit card issuers may deny your card application following bankruptcy.

Your best option will be to stick to cards you can get at the score range you fall within. Bankrate’s CardMatch tool is a good place to start, but a secured card may be your best bet. Getting a top-tier card will come in time, but for now, baby steps are key.

There are also cards with no credit requirements. Many of these cards are designed for college students and others new to credit. All credit cards terms documents have a Schumer Box outlining their rates and fees. Look this over carefully and avoid anything misleading or confusing.

Among the best credit cards to get after bankruptcy recommended by Bankrate are:

Tips for applying for credit cards after bankruptcy

It’s wise to follow three best practices before applying for a credit card after a Chapter 7 or Chapter 13 bankruptcy.

Check your credit score

Your credit score will suffer serious damage from the bankruptcy, no matter the chapter filed. Before applying for new credit, check your credit score to know exactly where you stand. Knowing your score will help you target the timing of credit card reentry and find a card you can qualify for. Remember that the bankruptcy will likely prevent you from qualifying for top-tier cards, and each application will entail a credit inquiry, further lowering your damaged score. Therefore, choose your applications wisely.

You might have access to your score through your bank or other financial institution, but there are many free ways to check your credit score. Also, anyone can get their credit report for free at While this site does not offer free scores, it is a valuable tool to check for the accuracy of your credit file, because it’s this information that defines your score.

Improving your credit score requires repairing your credit report. The process is similar to just starting out using credit for the first time; however, in addition to adding positive behaviors to your credit report, you also have to contend with the negative items that already exist.

Be vigilant and skeptical of any unsolicited offers of credit purported to help you recover. Bankruptcy filings can be a mailing list for high-cost products or scams.

Make a plan and a budget

Applying for and receiving your new credit card is the easy part. First, however, it’s wise to scrutinize your personal finances, crunch your numbers and determine how much you can afford to charge in any given month. Then, devise a budget and spending plan that will allow you to use your card responsibly.

Use pre-qualification and CardMatch tools

Take the time to get prequalified for a given credit card before submitting an official application so you can avoid any consequences to your credit and to learn if pursuing that card is even worth it. Bankrate’s CardMatch tool can help. You simply answer quick questions about your card preferences and finances, after which Bankrate will highlight your top card matches and approval odds for each. You can then make a decision based on the cards that offer the best fit.

Rebuilding your credit with a credit card

Once you have a credit card or loan, the number one key to rebuilding your credit is paying all of your bills — not just your credit card bills — on time, every time. Resist the temptation to ask for an increase in credit line once you have a card until you see your score recover. Otherwise, the answer will most likely be no, and you’ll damage your score with a hard inquiry.

Keep your credit card balances low. Ideally, you should keep them as close to zero as possible. Remember that this first card won’t come with a great rate and may even be secured by your own money. So, keeping your balances low is going to go a long way in building the credit utilization portion of your credit score (second only to on-time payments in importance). Plus, it will save you money in interest if you don’t carry a balance.

Want to rebuild your credit relatively quickly and improve your odds of getting approved for a credit card post-bankruptcy? In addition to the previous tips, try these suggestions:

  • Become an authorized user on a responsible and trusted person’s credit card, which enables their payment history to become part of your credit report.
  • Use Experian Boost or similar services that will report utilities and other monthly obligations to the credit bureaus.
  • File a credit report dispute if you discover errors or inaccuracies in your credit report.

How long does it take to improve your credit after bankruptcy?

Bankruptcy remains on your credit report for up to 10 years. However, it’s possible to begin improving your credit soon after bankruptcy if you work hard and develop responsible habits. As time passes and you continue making smart money moves, the impact of the bankruptcy on your credit will lessen.

The bottom line

Applying for a credit card after your bankruptcy will be an important step in rebuilding your financial life. You can apply after your bankruptcy is fully discharged, which usually happens anywhere from four months to five years after you file depending on the bankruptcy chapter filed.

Rebuilding your credit will take time as you work to establish a new pattern of using credit responsibly. Pay on time each month and keep your balances low. In time, your score will recover.

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