Your Post-Bankruptcy Credit

Many people fear the status of their credit report after bankruptcy. In reality, there is nothing to fear and you may be pleasantly surprised to learn that your credit will actually improve after your Dallas bankruptcy case. Why?

1. Collections halted — when you file for bankruptcy your creditors will be notified and given notice to halt collection efforts. This means that no accounts can be entered into a “collections” status on your credit report. Essentially, everything related to your debt and credit is frozen until the discharge.

2. Debt balances erased — whether you repay a portion of your debt or they are resolved through liquidation, your debt balances will reflect a zero balance owed upon the discharge of your debt. When your debt balances are lowered or erased the total debt-to-income ratio changes, which is one of the main formulas used to determine your credit score. When the ratio reflects a lesser debt balance compared to income level, your credit score will improve.

3. Delinquent statuses eliminated — after several missed payments on a debt, many lenders will change your account status to delinquent. Delinquent account statuses cause your credit score to drop considerably. When your debts are discharged in bankruptcy, the delinquent status is removed; freeing up your credit score to reflect a satisfactory account status.