Credit Scores and Bankruptcy

Posted on October 3, 2018. Filed under: Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Consumer Alerts | Tags: , , |

A question we often get in the office is what effect filing bankruptcy has on our credit score. As this chart, based on data from the New York Federal Reserve shows, credit scores do improve after the filing of any type of bankruptcy.

credit score path for bankruptcy filers

(For more details on credit scores and bankruptcy, the chart above is included in this blog post. )

If you think bankruptcy is an option for you, give us a call today. The first meeting is free and there is no obligation.

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Can filing bankruptcy improve your credit score ?

Posted on June 2, 2015. Filed under: Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Consumer Alerts, Reorganization of Debts | Tags: |

amazed

Sounds incredible, right ?

But the facts are pretty much established that it will.

How do we know this ?

For the first few months, most clients see no change in their credit score. After about the first year or so, folks will generally see their credit score improve and continue to improve year after year as long as they establish good financial practices and goals.

What ?! You are thinking: “But I thought filing bankruptcy totally destroyed my credit ?”

But it really doesn’t

I always tell clients that there are three reasons we know this.

#1 Having practiced bankruptcy law for the past 25 years, we have had folks that have filed, and need to come back several years later and file again. Since the first bankruptcy, they have incurred additional credit such as home loans, car loans, and other debt and for example, may have a loss of income, and have to file bankruptcy again. The point is they were able to obtain credit after the first bankruptcy.

#2 Approximately 1 to 1.5 million folks file bankruptcy every year in the United States. If the banks and lending companies had a policy of never lending to someone who had a bankruptcy on their credit report, they wouldn’t be in business. For the first few years after bankruptcy, you may have to pay a higher interest rate than someone who has not filed bankruptcy, but credit will likely be available to you if needed.

#3 In the alternative, if you don’t file bankruptcy, the late payments and delinquent debt continue to mount on your credit report and drive your score lower and lower. After filing bankruptcy, any potential new creditor that looks at your credit report will see that your old debt (which still shows on the credit report) has been discharged in bankruptcy and you can’t be forced to pay it and not be able to pay that new creditor. They may, then, feel more comfortable lending to you. Also, that new creditor knows that folks can only file Chapter 7 bankruptcy every 8 years.

Bankruptcy is a time-honored practice that can enable folks to get back on their feet and provide for their family. It is available as a Federal Law provided for in the United States Constitution.

photo credit: Elīna Baltiņa via photopin cc

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What if you were told that filing bankruptcy can ultimately improve your credit score ?

Posted on January 31, 2014. Filed under: Consumer Alerts, Consumer Bankruptcy Attorney | Tags: , , |

amazed person

Sounds amazing, right ?

But the facts are pretty much established that it will.

How do we know this ?

For the first few months, most clients see no change in their credit score. After about the first year or so, folks will generally see their credit score improve and continue to improve year after year as long as they establish good financial practices and goals.

What ?! You are thinking: “But I thought filing bankruptcy totally destroyed my credit ?”

But it really doesn’t

I always tell clients that there are three reasons we know this.

#1 Having practiced bankruptcy law for the past 25 years, we have had folks that have filed, and need to come back several years later and file again. Since the first bankruptcy, they have incurred additional credit such as home loans, car loans, and other debt and for example, may have a loss of income, and have to file bankruptcy again. The point is they were able to obtain credit after the first bankruptcy.

#2 Approximately 1 to 1.5 million folks file bankruptcy every year in the United States. If the banks and lending companies had a policy of never lending to someone who had a bankruptcy on their credit report, they wouldn’t be in business. For the first few years after bankruptcy, you may have to pay a higher interest rate than someone who has not filed bankruptcy, but credit will likely be available to you if needed.

#3 In the alternative, if you don’t file bankruptcy, the late payments and delinquent debt continue to mount on your credit report and drive your score lower and lower. After filing bankruptcy, any potential new creditor that looks at your credit report will see that your old debt (which still shows on the credit report) has been discharged in bankruptcy and you can’t be forced to pay it and not be able to pay that new creditor. They may, then, feel more comfortable lending to you. Also, that new creditor knows that folks can only file Chapter 7 bankruptcy every 8 years.

Bankruptcy is a time-honored practice that can enable folks to get back on their feet and provide for their family. It is available as a Federal Law provided for in the United States Constitution. If you think it can help, give us a call at Kentucky Bankruptcy Attorney John Rogers, toll-free 1-888-651-9353

photo credit: typexnick via photopin cc

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How can debtors obtain a copy of their credit reports and correct any errors?

Posted on September 30, 2013. Filed under: Consumer Alerts, Consumer Bankruptcy Attorney | Tags: , , , |

credit score report

Whenever a debtor’s application for credit is denied, the credit issuer is required to give the debtor, on request, a copy of any credit report that was used in making the decision. Otherwise, debtors can obtain their credit reports from the major credit bureaus. These reports are free once (1) a year at http://www.annualcreditreport.com . If there are errors in a report, such as an incorrect social security number or the listing of a debt that is not owed, the debtor should make a request for correction in writing to the bureau, enclosing copies of any documents that would establish the correct facts.

photo credit: i am real estate photographer via photopin cc

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