A common concern of clients when deciding whether or not to file for bankruptcy is the effect this type of legal proceeding will have on their credit rating and their ability to obtain loans, home mortgages, credit cards, and other forms of credit.
A bankruptcy may remain on your credit record for a period of up to 10 years from the date you filed your petition. However, this by no means implies that you will be unable to obtain credit during this period. You will likely still be able to apply for credit cards, car loans and other types of credit which can help you begin re-establishing your good credit, though your bankruptcy history may impact the terms offered to you by lenders, such as interest rates and lending fees.
Depending on your income, debt load, down payment size, and other factors, you will eventually be able to qualify for a mortgage, though there may be a waiting period required by your lender. It is important to remember that with the passage of time and dedicated effort to making on-time payments, you can rebuild your credit and put your bankruptcy history behind you.
What kind of information is evaluated to determine my credit score?
In determining your credit score, creditors evaluate certain information that is intended to help them determine the likelihood that you will repay a loan and make your payments on time. Your credit score is impacted by these and other factors:
- Payment history
- Variety and age of accounts held
- Collection actions
- Outstanding debt
- Bankruptcy history
What steps can I take to protect my credit following bankruptcy?
Once your bankruptcy proceedings have finished and your debts have been discharged, you should review your credit report and make sure that it accurately reflects the bankruptcy discharge. Any debts discharged in the proceedings should be listed with a zero balance on your credit report. If you see that any of your past debts still show up on your credit report with a remaining balance, you should contact the credit bureau right away and file a dispute to correct this error. Failure to do so could negatively affect your credit score and make it harder for you to obtain credit in the future.
The bankruptcy attorneys at BK Lawyers LLC can help you understand the potential ramifications a bankruptcy filing can have on your credit. Contact us to schedule your free initial consultation.