A common question we get asked by our clients in Manhattan and other boroughs of New York is whether they will be able to get any credit after filing bankruptcy.
1. Alternatives to Credit. First of all, although credit can be convenient there are many alternatives to credit. Many of the alternatives to using credit from a financial planning and budgeting perspective are better because people who buy things using credit often spend more than people who don’t. So, the first alternative to credit is to pay cash. This may require the financial discipline of saving up enough money to buy a new or used TV before making a purchase, rather than just “paying with plastic”. People paying cash will often compare prices more carefully than those paying with credit. Another classic alternative to credit is the “lay-a-way plan.” Many retail stores and department stores offer this option. You select an item and put down a deposit and make payments each month until you have paid in full. Once you have paid in full the store gives you the item.
Sometimes you may need to use a credit card not because you are buying something, but more as a form of security deposit — such as if you are renting a car or reserving a hotel room. They want you to use a credit card to hold a reservation, although they will let you pay the charges in cash. However, many rental car companies and hotels will accept a cash deposit in lieu of credit card. Also, if you make rental car or hotel arrangements through a travel agent or reseller (such as Expedia, Orbitz, etc.) since you have pre-paid the purchase prior to travel you don’t even face this problem.