Although it is certainly true that bankruptcy may negatively affect a filer's credit score, sometimes for years after the
discharge, there are steps that a debtor can take to lessen the impact. With careful planning, a debtor may be able to recover much more quickly in order to experience the financial freedom and fresh start that bankruptcy may offer.
Bankruptcy may lower a debtor's credit score by 50 to 300 points, depending on the particular situation. It may remain on their credit report for up to 10 years, but in some cases credit reporting agencies will remove it after 7 years. These factors may make it difficult to make large purchases, such as a home or car, and a debtor who has filed for bankruptcy may be subject to higher interest rates because they are seen as more of a risk.
Rebuilding after bankruptcy may seem difficult, but it is not impossible. There are basic steps that a debtor can take to restore his or her credit. A debtor can start with a secured credit card. Secured cards generally have low limits and require a debtor to make a deposit equal to the credit limit of the card. Using this type of card and paying its balance on or ahead of time can show lenders that the borrower is not a high risk. It can also improve the debtor's credit score. Similarly, the debtor can apply for regular credit cards, taking care to only use these if the money is already in place to pay it off as quickly as possible. During this time, it is also crucial for a debtor to remain current on any and all bills he or she is currently responsible for paying, such as rent, mortgage, utility bills, and more.
Keeping a close eye on one's credit score is also a wise practice in rebuilding credit after bankruptcy. In addition to ensuring that information on the report is accurate, a debtor can see immediately what impact his or her efforts are having. A debtor should also attempt to have the bankruptcy filing removed from the credit report as soon as possible.
Looking for experienced help through the bankruptcy process? Jacoby & Jacoby is a Long Island bankruptcy law firm that is committed to providing personalized, high-quality legal counsel to debtors in Chapter 7,
Chapter 13 and Chapter 11 filings. The firm also handles foreclosure defense and loan modifications. To learn more,
contact a Long Island bankruptcy attorney at the firm today.