It is not just about the protection that you get from creditors. It is also about the fact that all your assets will be used to cover your debts. How are you going to start anew? Will you be given a chance?
For your information, credit after bankruptcy is possible. In fact, you can actually keep your credit card after bankruptcy is declared.
However, if you owe money on the credit card during the time that you file for bankruptcy, you have to list it as a debt. In order to keep credit after debt, you have to report any debts you have. Not doing so will not only remove your chances of credit after bankruptcy, it may also land you in jail. If you do not owe anything on the card, however, it is not necessary to report the occurrence of bankruptcy to the company.
This means that you can have credit after bankruptcy through that card. Credit card companies, however, may find out about the bankruptcy through other means and subsequently cancel your card. This is commonly done by American Express as a precaution against bad debts.
Actually, most credit card companies will allow you to keep your card if you agree to reaffirm the debt amount after the bankruptcy filing is done. This means that you will have credit after bankruptcy as long as you are willing to take on the original amount of your old debt. This means that in order to get credit after bankruptcy, you will have to enter into a new agreement with the creditors.
What is the rationale behind credit after bankruptcy? Well, you have to realize that creditors see bankruptcy as a threat to their business.
And they see your credit as their business. If they terminate your credit, there is a huge chance that they won't be able to collect from you. However, if they exchange credit after bankruptcy for an opportunity to collect the full amount of your debt, then they would be willing to do so.
Every person also sees bankruptcy as a chance to begin a new life. Of course, credit companies wish to profit from that new life. They therefore offer credit after bankruptcy.
However, you should realize that there will be consequences. If you want to get credit after bankruptcy then you will have to settle for certain conditions imposed by the company.
For one thing, the limit on your credit card will be much lower. This is just a precaution by the company.
By imposing this rule on credit after bankruptcy, then the company will be able to make sure that you won't spend more than what you are able to pay. Also, if you want the privilege of credit after bankruptcy, then you might have to pay more. This is another precaution by the credit company just to make sure that they at least get some money from you. All in all, credit after bankruptcy may be hard to get but it does exist.