Although bankruptcy may be reported on your credit report for up to 10 years, much of the damage done to your credit happens prior to filing for bankruptcy. By the time a person files for bankruptcy, their debt accounts have already been in considered delinquent by many of their creditors. It is this delinquency status that does the most damage to a credit standing.
The reason people file for bankruptcy is to resolve their debts while protecting many of their assets from liquidation. After a bankruptcy case has been completed, you may experience an improvement in your credit standing as the debts have been absolved and the accounts are no longer considered delinquent. However, if a bankruptcy case has been dismissed by the court, your credit may continue to suffer.
Will I Be Able To Improve My Credit Standing?
In some cases you may be able to improve your credit standing outside of bankruptcy. The best way to improve your credit is to reduce or eliminate your debts. If you can afford to make a small payment each month, your creditor may be willing to negotiate a repayment plan with you directly. Often, a creditor would prefer to negotiate a debt with you directly outside of bankruptcy, as they are more likely to obtain the full amount owed through a direct arrangement; whereas they risk losing more money through debt elimination ordered by the court. If you cannot afford to repay the debts directly, or the creditor will not negotiate a payment plan, you should consider re-filing for bankruptcy.
To begin repairing your credit, obtain written approval from your creditor allowing you to repay your debts. Always make timely payments and notify your creditor of any changes that may occur in your financial situation. Avoid taking on any new debt and limit the use of any credit cards or lines of credit.