As observed on the Bankrate website, filing for bankruptcy is analogous to opening a safety valve when the pressure from one’s financial debts has become overwhelming. Most people who file for bankruptcy seeking debt relief have been “fighting financial problems for at least two to three years.” Unfortunately, those attempting to make ends meet in the face of insurmountable debts may have ended up overdrawing their checking accounts thereby bouncing more checks than they care to remember.
People who have failed to manage a bank account in a fiscally prudent manner are reported to a monitoring agency known as the ChexSystems. Banks will request a ChexSystems report when you attempt to open a checking account. If the ChexSystems report reveals that you have a history of mismanaging a checking account, or if a credit report indicates a bankruptcy, your chances of opening a conventional checking account are not especially good. Fortunately, some banks now offer what is termed as a second-chance checking account.
According to the Find A Better Bank website, second-chance checking accounts are designed for people whom banks will not allow to open a conventional checking account due to past banking mismanagement or a negative credit report. Second-chance checking accounts are no frills accounts which do not offer free checks, overdraft protection or rewards programs. They are most certainly not the best checking accounts that banks or credit unions offer. Indeed, they come with both restrictions and significantly higher fees than conventional checking accounts.
Despite their drawbacks, if you want to have an account to deposit your paycheck in-and have the flexibility to pay your bills on-line-a second-chance checking account may be a good option. The good news is that, if you are permitted to open a second-chance account and do not mismanage it, most financial institutions will usually allow you to upgrade to a more traditional checking account once you prove yourself to be a fiscally responsible bank customer.
A CNN news report observes that prepaid cards have become “wildly popular.” For those who find themselves unable to open a checking account due to their prior financial track record, a prepaid card could be an alternative to having to carry cash everywhere they go. Prepaid cards offer several benefits. First, they can be loaded with cash at major retailers. Second, prepaid cards give customers access to thousands of ATMs located throughout the United States. Third, using a prepaid card will free you from the worry of having to carry about substantial amounts of cash on your person thereby inviting a potential robbery.
However, using prepaid cards presents drawback as well as benefits. The primary drawback is that there are often significant fees associated with the cards such as activation fees, ATM fees and reloading fees. Another drawback is that prepaid cards do not typically help you rebuild credit with the major credit bureaus. Accordingly, as noted by one financial analyst interviewed for the CNN report, prepaid cards should be resorted to only in the event that you cannot find a bank willing to open a checking account for you.
Seek legal help
If you find yourself financially buried under a mountain of debt that you feel that you will never be able to repay, you should consult with a Kentucky attorney experienced in handling bankruptcy matters. An attorney will be glad to discuss with you various options that can give you a fresh start.