Filing for bankruptcy can give people with financial problems the opportunity to start fresh. There's no doubt that filing for bankruptcy is beneficial in many ways, but there are drawbacks to this decision as well. Bankruptcy can negatively impact your credit, which means life after bankruptcy won't always be easy. But fortunately, there are ways to rebuild your credit and recover from the devastating effects of bankruptcy.
Filing for bankruptcy will have a major impact on your credit score. The extent of this impact will vary on a case-by-case basis, but it could cause your score to drop by more than 100 points.
Having a lower credit score will make you less attractive to lenders, so it could be harder for you to obtain a mortgage, credit card, auto loan, or personal loan. If you are approved for a new loan, you may be charged higher interest rates due to your low credit score.
Bankruptcy records will stay on your credit report for a long period of time after your case has been closed. As a result, lenders that check your credit history will be able to see that you recently filed for bankruptcy.
If you filed for Chapter 7 bankruptcy, it will remain on your record for a period of 10 years from the date it was filed. However, Chapter 13 bankruptcy will only remain on your record for a period of 7 years from the date it was filed.
There is no way to remove the record of your Chapter 7 or Chapter 13 bankruptcy early. At the end of the 7-year or 10-year period, the bankruptcy will automatically fall off of your credit report. Even though the bankruptcy will remain on your report for years, the impact of the bankruptcy on your credit score will start to lessen over time. Because of this, it is possible to improve your credit score even if your bankruptcy is still on your record.
There are many different ways to improve your credit after filing for bankruptcy. If you have recently filed for bankruptcy, follow these tips:
The time that it takes to rebuild your credit after filing for bankruptcy will vary on a case-by-case basis. If you making an effort to improve your credit score shortly after bankruptcy, you may start to see an improvement within a matter of months. If you continue to work at improving your credit score, you may reach the "good" credit score range after several years. You will see a more drastic increase in your credit score once the bankruptcy falls off of your record after 7 or 10 years.
It's important to be patient when it comes to building your credit. It may take time, but don't lose sight of the end goal. If you make one mistake during this crucial rebuilding period, you could lose a lot of the progress you have made with credit score since filing for bankruptcy.
Are you trying to rebuild your credit-and your life-after bankruptcy? If so, seek legal representation from the experienced bankruptcy attorneys at Hammond Law Firm. Let us create a customized plan to help you improve your credit and take control of your finances. To schedule a free consultation, call 405-216-0007 or submit your information via the form on this website.