I would like to believe that every client I have prepared a bankruptcy petition for is currently enjoying a “financially free” life. But let’s face facts – this is probably not true. In the real world, you probably have been bombarded with credit card offers almost the day after you filed your bankruptcy petition. But this is a trap! These companies know you cannot file a Chapter 7 bankruptcy for at least 8 years, so they “sucker” you in now so they can make a lot of money or harass you to death for the next 8 years. I hope that none of you have fallen for this malicious trap, set up by big, rich, business people – but if you have, you better read on and see what you can do to get out of it.
The main credit card companies that hit most people who recently filed bankruptcy are names like Providian, Capital One, Orchard Bank, First USA, Direct Merchants, First Consumers, First Premier and many more are being developed as you are reading this. These types of companies issue “high-risk” credit cards that ARE NOT the same as other credit cards you have had in the past.
The difference in these types of credit cards is that you are charged fees for just about everything. For instance, Jane, who filed bankruptcy, received a pre-approved card from Capital One with a $200 limit. It was filled with “hype” about how they were concerned about helping Jane rebuild her credit. What a bunch of bull!! These companies don’t care about you building your credit. They are only interested in hooking you … period!!
The monthly administration fee for this $200 credit card was $16.00. One month Jane had a $184.03 balance owed on her credit card. When the company added their monthly administrative fee, the balance became $200.03. This new balance was over her credit limit by only 3 pennies but Capital One added on an additional $39.00 over-the-limit fee. And what is sad about it – Capital One was the cause of the balance going over the credit limit. Now, do you really think these credit card companies want to help you build your credit or care about you as a human being? Of course not!!
To get out of this mess, Jane immediately made a $100 payment to Capital One the moment her monthly bill arrived. She even cut down paying other bills to be able to afford this $100 payment – but she got the bill paid to a safe level where no additional fees would be added to her account. Then, she immediately cut up the credit card and paid another $50 the next month. Finally, within the third month, Jane paid off this credit card entirely, then wrote to the company and cancelled the credit card.
Another “rip-off” credit card company is First Premier Bank out of Sioux Falls, South Dakota. Most of the time they advertise on the internet. You fill in some basic information about yourself and you are issued a guaranteed credit card with a $200.00 credit limit. What’s so bad about this? The fee is $175.00. So regardless of whether you charge a penny on the credit card or not – your first bill will show an available balance of $25.00 with $175.00 in fees owed to them.
The only way you can cancel this card is by never using the card for a purchase; and by notifying the company within 3 days of the receipt of your card. If you do not notify them within 3 days and return the credit card cut in half, you will be liable for the $175.00 fee on a $200.00 credit limit card. This my friend, is a supreme rip-off and a horrible way for any company to do business.