bankruptcy generally remains on your credit
up to ten years. Nevertheless, immediately after filing
bankruptcy, you can take steps to start rebuilding your credit.
Bankruptcy clients report that a number of
credit companies often seek recent bankruptcy filers to extend credit
to (for example, vehicle loans).
Why would lenders be willing to do this? The reason is that
credit agencies know that you are wiping out all or most of your debts
and cannot file a Chapter 7 again for at least eight years. Therefore,
the modern competitive lending environment, credit, at least for the
time being, appears to be available to the
recently bankrupt. However, obtaining credit may be more
before and credit limits will likely be lower.
factor to improving your credit rating is making payments on time. By
filing bankruptcy, debtors continue to miss payments, thereby further
their credit rating. By filing
bankruptcy, negative reporting due to nonpayment of debts may
potentially stop immediately. Thus, you may begin re-establishing
credit faster by keeping current on your house, vehicle,
utilities and/or other payments .
bankruptcy may harm your credit rating, it has been reported
that a bankruptcy filing and
discharge can often improve a person's FICO credit score
within 1.5 to 2 years.
While a bankruptcy filing frequently remains on one's credit report for
years, such bankruptcy filing can have
long-term positive effects in the long run because of a lesser
percentage of debt on your credit report and the new found ability to
keep current on new or existing obligations.
One way that you can
rebuild your credit score after
bankruptcy is by obtaining a secure credit card. With
a secured credit card, you can only charge up to the amount
that been deposited in the bank as security for payment on the
card. Using a secured credit card results
in reporting to the credit bureaus of extended credit and may
help reestablish your credit.
a person or family is in serious financial distress and can't
pay their debts, their credit score will likely continue to decline
anyway. Thus, bankruptcy may possibly provide you with an
opportunity to begin to repair your credit more quickly than
if you don't file for bankruptcy relief.
course, bankruptcy is not intended to be a convenient financial
planning device to provide a person with a head start, but,
rather, as a last resort to provide a financially burdened person
couple with a "fresh start."
Remember this, it is not your credit score
that truly reflects your financial strength. What makes you
worthy is a steady income stream and savings.
the nature of the financial climate that we are currently experiencing,
cannot predict one's financial future with certainty.
However, it is anticipated that if you file bankruptcy and
receive a discharge of debts, that, over time, the bankruptcy's
negative effect on your credit will diminish over time.