Many consumers would expect credit card companies to hate bankruptcy. However, many credit card companies are aggressively marketing to consumers who are considering bankruptcy or have completed the bankruptcy process. Bankruptcy reform has caused many credit card companies to actively pursue consumers who they would otherwise ignore. Bankruptcy reform measures that went into effect in 2005 require all individuals entering bankruptcy to go through a government counseling program. This program teaches individuals how to manage their finances as well as how individuals can avoid bankruptcy.
Typically, customers spend 90 minutes in this debt counseling session. A counselor may suggest that consumers simply budget properly and use a debt consolidation service rather than go through bankruptcy. Bankruptcy can severely impact a consumers credit history and make the consumer unable to qualify for credit accounts for several years. However, a debt consolidation service can help consumers to consolidate their accounts into one monthly payment as well as lower the interest rates that the consumer is paying.
Credit card companies are actively marketing to these customers because they have been shown to make poor decisions and they are still eligible for credit. While credit card companies will not give these customers large account limits, they will often allow them to open small accounts with high rates and fees. Debt relief companies may also assist customers in opening new credit accounts. This is often done to help individuals who have had late payments and other negative information on their credit report. When individuals open new accounts and make on time, monthly payments their credit report and credit score will improve.
Many credit card companies are experiencing a period of rapid growth. Individuals who must go through counseling for their large amounts of debt are perfect customers for credit card companies. They are willing to pay the minimum monthly payment as well as charge a large amount of money to a high interest credit card account. This ensures that credit card marketing departments spend more and more money targeting these customers.