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Bankruptcy And Your Credit Report
Many people think that bankruptcy will remain on their credit for the rest of their life. The truth is, bankruptcy only lasts for a maximum of 10 years. This is only 3 years longer than other negative credit, so in the big picture, it's not much worse. Assuming you keep the rest of your credit clean after bankruptcy, you'll likely qualify for credit cards, car loans, and even a mortgage, in as little as 12 months. Some people who keep their credit clean before they file for bankruptcy can qualify for new credit immediately.
Before filing for bankruptcy, you need to know how it will effect your credit. By doing your best to minimize the negative effect on your credit, you can qualify for new credit in as little as 12 months.
Also, the fact that bankruptcy can immediately eliminate past due debts, rather than letting them drag out for years, can actually be better for your credit, initially. But, in most cases, a bankruptcy will eventually end up as a negative mark on your credit. In an ideal situation, after filing bankruptcy, it should be the only negative item left on your credit report. One bankruptcy, vs. 10 or 20 negative tradelines should equal a higher credit score and improve your chances of qualifying for new credit.
A Chapter 13 bankruptcy usually remains for 7 years and a Chapter 7 bankruptcy will remain for 10 years. It's also important to note that a bankruptcy case will remain on public record indefinitely.
Another issue with bankruptcy is that more and more companies are pulling credit reports and public records before hiring new employees. A standard employment background check includes checking credit, public records, and your criminal background. Having a criminal background is an obvious problem, but what people don't realize is that a bankruptcy or negative credit report could cost them a new job. This is why credit repair is so important after bankruptcy.
By understanding how bankruptcy effects your credit report, you can be prepared to focus on the positive effects, while minimizing the negative.
Once your bankruptcy is dismissed and the negative credit has been marked as settled or closed on your credit report, it will just be a matter of time until your credit begins to imporve.
"The first 12 months after bankruptcy will be the toughest, but after time and with proper action, your credit will recover and be better than before."Although bankruptcy will likely be a blemish on your credit report for several years, bankruptcy should immediately improve your financial situation. By eliminating your past debt, you can move on with your life, without the constant worry of paying bills or falling deeper in debt.
Ultimately, bankruptcy is meant to give you a fresh start and when done correctly, your life should be better after bankruptcy. You should have an easier time paying your bills and turning your bad credit into good credit. Those who suffer after bankruptcy usually continue to make wrong financial choices, receive bad bankruptcy advice, or may have chosen to file without a bankruptcy attorney. Although bankruptcy is not always the best option, it's something you should consider when you have excessive credit card debt, or when you feel like you're in over your head.
Filing for bankruptcy doesn't have to be scary. Just make sure it's your best option before moving forward.
Chapter 7 Bankruptcy
Chapter 13 Bankruptcy
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