Your Credit Report After Bankruptcy

: Chris Lee Law Firm

  Filed under: Credit Tips

Credit Report After BankruptcyFiling for bankruptcy does affect your credit. A bankruptcy can stay on your credit report for up to 7 years. This does not mean that you will have to wait 7 years to obtain credit again, or that you will be suffering from credit damage after bankruptcy. Many credit companies are willing to provide people with lines of credit immediately after a bankruptcy. There are ways you can begin to repair your credit before you even file for bankruptcy.

Facts About Your Credit

Many people are surprised to find out that their credit score is not affected by bankruptcy as much as they thought. You might even be surprised to find your credit score can actually improve after bankruptcy. The reason is that when you are late or miss a payment, your credit score begins to be effected right away. The worst damage done to your credit is the result of delinquent accounts. When you have your debts discharged in a Chapter 7 bankruptcy, your credit is erased of any delinquencies. Similarly, once you complete your debt repayment plan in a Chapter 13 bankruptcy, your accounts are removed from delinquent status and are marked as having been paid. A Chapter 13 bankruptcy will effect your credit less than a Chapter 7 bankruptcy because you repaid your debts, rather than having them eliminated through bankruptcy. Creditors will view your Chapter 13 repayment plan as  more favorable than not repaying your debts at all.

How You Can Take Action

Before filing for bankruptcy you should obtain a copy of your credit report. Make sure all of the information is accurate and up to date before proceeding with your bankruptcy petition. It is never comfortable to think about your debts, especially when it is all outlined on paper; but to benefit from bankruptcy, you must have accurate information about your debts and assets. After bankruptcy, you should contact your creditors to obtain an account statement to reflect your zero or paid balances. It is also beneficial to obtain your credit report to make sure the new zero balances are reflected on your credit report.

When you decide to apply for credit, write a letter to the credit company detailing your situation. People filing for bankruptcy often have experienced unexpected financial hardships that prevented them from keeping up with their payments. You have the right to explain your situation to a new creditor and provide them with explanation as to how you ended up seeking bankruptcy protection. You will be more likely to obtain credit in the future if you can provide a new creditor with your account statements showing zero balances, your new credit report and a letter of explanation.  Bankruptcy is a tool of assistance and not meant to hinder your future. Although your credit will need some repair, you will be on the road to credit recovery much faster through bankruptcy than continuing to default on your accounts.

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