Bankruptcy will, without a debt, be picked up by the major credit reporting agencies and will have a significant impact on your credit score. There are ways to move forward though.
Bankruptcy and Your Credit
A bankruptcy will, without a doubt, impact your credit score for what can be ten years following the filing. Unfortunately, according to the Federal Trade Commission (FTC), it is not possible to remove this information from a credit report, but there are ways to reduce the duration that a filing is reported.
Under the Fair Credit Reporting Act, a bankruptcy filing can remain on a credit report for 10 years following the filing. In Chapter 13, this can be done as early as 7 years due to the fact that Chapter 13 allows for a repayment plan. This, in some ways, is a way to provide an incentive for people to file Chapter 13.
At the end of the ten years, credit reporting agencies are required to remove any bankruptcy. It’s important that a debtor follows up to ensure the bankruptcy has been removed.
Additionally, there are ways to improve your credit score after you have filed for bankruptcy. This process can be started within six months to a year after the discharge is complete. These days, lenders tend to look more at credit scores than the comments that are on a credit report. This means that if you are actively working on rebuilding your credit, a lender will take that into account.
One first step is to review all of your credit reports, and often, to verify that all the information is correct and up to date. Stay on top of your credit reports, and as soon as the debt is discharged make sure it is reported. You can also contact a credit bureau to ensure that discharged debts do not show up as current debts.
You can also obtain a secured credit card that requires collateral, such as a cash deposit or savings account. If you are able to make payments in a timely fashion, a credit card will usually drop the requirement for collateral. This allows you to prove that you are capable of paying back debt in a timely fashion.
Working with a Bankruptcy Attorney
Bankruptcy can be an overwhelming process. That’s why we advise that you work with a phoenix business bankruptcy lawyer that is familiar with various debt repayment options. We are committed to helping our clients understand their rights and options under the bankruptcy law and developing the debt relief solution that makes the most sense for each individual. We invite you to call (602) 648-3274 or contact our Arizona office to schedule a free initial consultation.
668 N. 44th St., Ste 320, Phoenix, AZ 85008