Bankruptcy credit cards

Declaring bankruptcy will affect your credit rating for years, but it may be the only option available to individuals in serious financial distress.

While securing approval for credit cards will be challenging while you’re bankrupt, in the years after your discharge it’s not impossible.

In this article, the team at Irwin Insolvency explains how you can get approved for bankruptcy credit cards.

Applying for Credit Cards During Bankruptcy

If you’ve been declared bankrupt, control of your bank accounts, finances and any existing credit cards will be taken over by the official receiver appointed to oversee your case. It’s likely that the bank will cancel any credit cards you already possess, if they haven’t already.

While you are an undischarged bankrupt, you are legally allowed to take out credit. However, if you are trying to secure £500 or more in credit, you must legally inform the lender that you are bankrupt. This may affect their decision whether or not to approve your credit.

For this reason, it’s unlikely that you’ll be approved for any bankruptcy credit cards before you are discharged.

Bankruptcy Credit Cards After Discharge

After 12 months, it’s usual for individuals to be discharged from the terms of their bankruptcy. Now there are fewer restrictions on what you can and can’t apply for in terms of credit, but you will still find it difficult to be approved.

While you are not legally obliged to inform a lender that you were bankrupt, if they ask you directly, you have to answer truthfully. Bankruptcy will also remain on your credit rating for six years after your discharge, so any credit check will quickly reveal your past financial situation.

Credit card providers will see you as high risk, and therefore they’ll be less willing to lend you money at favourable rates. Instead, you should approach specialist bankruptcy credit card providers.

They offer credit cards specifically designed to help discharged bankrupts secure credit and rebuild their credit scores, although bear in mind that the interest rates will be high and repayment terms strict.

How do I keep a credit card after bankruptcy?

Most debtors file for bankruptcy to wipe out credit card debt, so it’s not necessarily a good idea to keep old credit cards once you’ve filed for bankruptcy.

Should you want to keep hold of an existing card, it is possible to do so, so long as you reaffirm it once bankruptcy has been filed. Doing this will make you personally liable for any debt again and you will also lose any benefits from a bankruptcy discharge. With this in mind, it is recommended that you do not reaffirm your old credit card unless you absolutely have to.

How to Rebuild Your Credit Rating

It’s important that you begin rebuilding your credit rating as soon as you are discharged from bankruptcy. It’s a slow process, but there are a number of things you can do to make you more attractive to credit card providers.

These include:

  • Applying for specialist bankruptcy credit cards, using them and ensuring they are paid off on time
  • Paying bills on time and in full, including utility bills, rent and any continuing bankruptcy debts
  • Demonstrating you have a consistent income to credit providers
  • Proving you are financially stable, despite your past bankruptcy

Contact Irwin Insolvency Today for More Information on Bankruptcy Credit Cards

Applying for bankruptcy credit cards can be challenging, and it takes time to rebuild your credit score after being discharged. But with the right advice, it’s not impossible to get your finances back on track.

Irwin Insolvency’s experienced bankruptcy advisors are on hand to provide you with the financial assistance you need. Contact our team today to find out how we can help you.

Contact Irwin Insolvency today for your free consultation

Call us
0800 254 5122

About the author

Gerald Irwin

Gerald Irwin is founder and director of Sutton Coldfield-based licensed insolvency practitioners and business advisers, Irwin Insolvency. He specialises in corporate recovery, insolvency,
 rescue and turnaround.