If you have a recently discharged bankruptcy and want to begin reestablishing your credit then you will want to read on. We will be looking at everything you need to know about getting credit cards after a bankruptcy.

Make sure your credit report is accurate

You may think that reviewing your credit right after a bankruptcy discharge is not that important. This is not the case! Creditors routinely misreport accounts that have been included in a bankruptcy. Instead of reporting them as included in the bankruptcy and discharged, they report them as being open and currently past due. This lowers your FICO score and makes it hard to get new credit.

You will need to dispute any accounts that are not reporting accurately with each of the three major credit bureaus. Once this is corrected, it’s time to start shopping!

Shop wisely

If your bankruptcy discharge is recent, you will want to shop for a secured credit card. If you are at least six months out from your bankruptcy discharge, you may want to consider applying for an unsecured card for people with bad credit. If you decide to try to get an unsecured credit card, you may want to look for a company that offers both secured and unsecured cards. That way if you can’t get an unsecured card, you can still get the secured card.

Make sure you select a card that does not carry exorbitant fees. Don’t fall into the trap of assuming that you should be happy than anyone will do business with you and accepting the first card you find. There are many vulture companies out there that charge fees that are almost equal to your entire credit line. This is not what you want! Look for a card that does not have an application fee and whose annual fee is $45 or less.

It is critical that you make sure that any credit card that you select reports to all three of the credit bureaus. Most credit card companies report to all credit bureaus, but you will want to verify this up front!

Credit cards that offer an automatic credit line increase after a set number of payments are also something you should look for. These type of programs can help you build up your credit history without having to remember to call and request credit line increases.

Filing bankruptcy is a nightmare for anyone. While it is not something you might like to even think about, there might come a time when you might have to comprehend the bankruptcy laws and file one yourself. But how can you know whether filing bankruptcy is the right thing for you? Or whether you can prevent it? What exactly is bankruptcy?

For starters, bankruptcy is a federal court process to help individuals and businesses repay their debts under the protection of the bankruptcy court (Chapter 13 Bankruptcy) or get rid of their debts completely (Chapter 7 Bankruptcy). If an individual or business files for bankruptcy, the court issues a stay that prohibits creditors from taking any action to recover the debts from you without court approval.

Bankruptcies fall under to broad categories – liquidation and reorganization. US bankruptcy laws cover liquidation under Chapter 7 Bankruptcy, which allows your assets to be sold off or liquidated to pay off your debts.

The other type of bankruptcy – reorganization is more commonly referred to as Chapter 13 Bankruptcy. Under reorganization bankruptcy, a repayment proposal is worked out with the court and accordingly some debts are repaid in full, others as a percentage of the original debt while some others are signed off without repayment. A reorganization bankruptcy would usually be spread over three to five years.

But after filing for reorganization bankruptcy, it is very important you stick to the repayment plan because it is only at the end that creditors might grant you new credit. While a liquidation bankruptcy stays on your credit history for 10 years and you are denied credit during this period, a reorganization bankruptcy can be cleared off your credit history after 6 years. And depending on your repayment record, you can reestablish your credit.

Bankruptcy filing has serious consequences and bankruptcy laws don’t look easily upon individuals or businesses filing for it. The decision to file bankruptcy should not be taken easily because having your debts erased does not miraculously solve your long term financial issues. This can only be a once in a lifetime resort to get out of crushing financial burden brought on your by job loss, medical bills, or other circumstances that are out of our control.

The best way to avoid bankruptcy is to be both “penny and pound wise,” meaning practicing good money management. This includes avoiding impulse spending, not using a credit card unless you have the cash to pay it off, tearing up any special credit card offers received, devising and following a realistic budget and covering yourself adequately by insurance (medical, homeowners, auto). At the same time, you need to make sure you don’t speculate too much or fall into company with people who have questionable financial habits.

It is very easy to get into a situation where your credit card debt becomes unmanageable. The reality is that the credit card company makes more profit if you pay only the amount mentioned in the ‘minimum amount due’ column and that is why it is highlighted in the statement. This minimum payable thing gets ingrained in your mindset. The next time you want something very badly but cannot afford to, this minimum amount payable option flashes before your eyes and you yield to the temptation and go ahead with the purchase. The reality is that you shouldn’t be doing that because actually you cannot afford it and borrowing money to pay for something that you could do without. Over a period it becomes a habit and before you know credit card bankruptcy is staring at you. What adds to the problem is that over time you opt for multiple credit cards and fail to keep track of the debt you are accumulating. Believe it or not, that is one of the most common reasons why people seek credit counseling services for avoiding credit card bankruptcy. Credit card companies fix your credit limits on the basis of your affordability, which is not necessarily what your monthly income is. Credit limits allowed by credit card companies are primarily on the basis of your previous payment record. For example, if you have been paying the full amount of your purchases for one year, they will increase your credit limit even if you do not apply for extended credit. They presume that you will pay your dues in a timely manner. The problem arises when you start taking it to as your right rather than a facility to be used with diligence. That brings us to the first rule of managing credit card debt: never use your credit card unless you are sure that you can afford to pay the full amount. The next in line relates to your monthly payment. Paying the minimum amount due is not the right thing to do. The credit card should be treated as a facility that allows you not to carry large amounts of cash. It is also something that you can use, sparingly though, for making big ticket purchases that you cannot do without. While buying expensive items you need to be sure that you will be able to pay the full amount plus interest charged on it within a reasonable period. Till the time you are able to revert to paying the full amount every month, suspend plans for buying expensive items. The sad part is that despite all warnings, suggestions and advice people tend to overspend. The temptation of owning more than the Jones next door is so much that people tend to overlook and go ahead and buy what they actually do not need and cannot really afford to. That is why credit counseling services are in business. More people are looking at debt solutions such a debt consolidations and debt settlement now than ever before. It is true that a debt settlement company will arrange a debt settlement and reduce interest burden and get the lending company to allow you more time to pay your credit card debt. But do you really want that to happen. If you cannot resist temptations to borrow against your credit cards and want to avoid a credit card bankruptcy like situation what you need is a debit card.

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OK, before you even start lowering your brow, I need to define a couple of terms for you. First , what the heck is an exit loan? When a company enters bankruptcy protection, they do so with the plan to exit from bankruptcy. In order to exit, they will need financing. This type of financing is referred to as leveraged loans or distressed debt. The next question is why would someone loan money to a organization that has a high chance of failing and going into default. The retort to the question is that the more risk the higher the payback and hedge funds love it! The are referred to as leveraged loan hedge funds.

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According to a Wall Street Journal article that touched upon DIP or debtor in possession financing, 189 companies defaulted on liability last year causing a spike in exit loan financing demand. So who are these companies? In numerous cases they are household names like Six Flags theme-park. Six Flags went into chapter 11 bankruptcy and is exiting that with a secured credit facility of about $830 financed by a group of three major players including JP Morgan Chase. Six Flags is a great example of a company who’s theme-park is setting record attendance levels but due to the maturity of leveraged debt with no one willing to refinance it, they were forced to default and withdrawal to bankruptcy safeguard . Emerging from bankruptcy, there is a new market and a new class of financing available to them.

So where is the hard cash coming from? Basically leveraged loans outperformed high yield bonds this past year. Thus investors are plowing their money into leveraged loan funds and pulling them from high yield credit. But it isn’t just a shifting of money from the high yield credit markets, there is net new money pouring into this market. A few of the statistics that can be found on line are that is that the leveraged loan market attracted almost 1.4 billion dollars this year and over 450 million has fled from the high yield credit markets.

As a result of the leveraged loan markets surging, the issuance of corporate debt is down significantly. Some estimates show that corporate debt issuance is down almost 50% from the same period last year.

The other outstanding question is what happens to exit loans, bank loans, and high yield debt if the Fed raises rates. This is almost certain to happen as the Fed is trying to steer companies toward private sector financing as they surface from the troubles of 2008/2009.

Due to companies emerging from bankruptcy quicker and in need of financing, leveraged loan investors are in demand. This has created possibility and with opportunity comes investors. It will definately be a market to keep an eye out for as the markets and corporations shake loose from one of the worst financial crisis since the great depression. This coupled with record defaults in 09 will make a lucrative sales environment for the leveraged debt industry all together.

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The new bankruptcy law is in effect, and the climate has drastically changed for people who are considering bankruptcy. In this article we will touch on some of the details of the new law, and explain exactly how these new changes will affect you.

First, let’s touch on the new counseling requirements. According to the new law, you must complete credit counseling with an agency approved by the United States Trustee’s office before you can file for bankruptcy under either Chapter 13 or Chapter 7. Because this counseling is to decide whether you need to file for bankruptcy, or if an informal payment plan would be a better alternative for your situation. The counseling is mandatory for everyone, even for people who know for certain that a repayment plan is not what they want.

However, you are required only to join in the counseling; you do not have to go with any repayment plans the agency recommends.

But if you are given a plan, you will have to present the plan to the court with a certificate showing that you attended the counseling before you can file for bankruptcy. Once your bankruptcy case is over, you will have to attend another counseling session focused on learning personal financial management skills to complete your bankruptcy and erase your debts.

Another major change that comes with the new law effects many people who want to file chapter 7 bankruptcy. Under the old law, most people filing could choose between Chapter 7 and Chapter 13, and most people chose Chapter 7. Because of the new law, many filers with higher incomes will be prohibited from using Chapter 7.

The first step in determining whether or not you can file for Chapter 7 is to compare your current monthly income to the median income for a family of your size in the state you live in. In the context of the new law, your current monthly income is not your income at the time you file, but your average income over the last six months before you file.

Once you have determined your income, measure it against the median income in your state. If your income is equal to or less than the median, you can file for Chapter 7. If it is more than the median, you must pass a requirement of the new law called the means test. The means test requires you to determine your amount of “disposable income” by subtracting different variables from your current monthly income.

If your current monthly income after subtracting these amounts is under $100, you pass the means test, and will be able to file for Chapter 7. If you income is more than $166.66, you will be prohibited from using Chapter 7. Those in the middle of these incomes will be able to file for chapter 7, but will be required to still pay a percentage of their debt.

Yet another important change caused by the new law is that lawyers may be harder to find, and possibly more expensive. The new law has added many complex requirements to the process of filing for bankruptcy that will make it more time consuming for lawyers to represent their clients in bankruptcy cases. The end result being that attorney fees for representation will increase. Also, the amount of time that lawyers must put into the new regulations has increased and it is likely that it may be harder to find a lawyer that solely specialized in bankruptcy in the future. Many experts are predicting that the stress of these new requirements may drive some bankruptcy lawyers out of the field completely.

Now that you know many of the changes the new bankruptcy laws hold for your situation, be aware and file with care.