Friday, June 17, 2011

How Will Bankruptcy Affect My Credit?

A credit score, also known as a credit score is the score representing an individual's creditworthiness. In simple terms, is the label given to the likelihood of a person to pay their debts.

Rating a person's credit is used mainly for three things: buy a house, buy a car, and for personal loans. A credit score over 750 is considered excellent, while anything below 500 is considered poor.

How does a person score bankruptcy credit?

The bankruptcy stays on your credit report for 10 years, but it can affect your credit rating for almost as long. However, the fact that a person is filing bankruptcy means you have a lot of debt and is already behind in meeting debt obligations. Your credit rating is not very good. Depending on your situation, bankruptcy may actually increase your credit score

Is there a positive side to this?

Bankruptcy can certainly affect your credit rating, but there is another side of this equation.

You can start rebuilding your credit after filing for bankruptcy because there is no negative information, such as late payments, depreciation, accounts payable and the like. A bankruptcy discharge eliminates all your debt and gives an improvement in the proportion of debt income. The government designed bankruptcy as a way to start again.

In Chapter 13 cases in which it is given plenty of time to pay past debts, the best thing to do is make the bankruptcy plan payments over time. In fact, the behavior of credit after bankruptcy do more to help or hurt your credit rating as the act of bankruptcy.

Get approved for a loan can be difficult, but there are certain lenders that extend credit to the bankrupt after the borrowers, but do not expect to get the best rates in the first place.

If you are down on their luck and bankruptcy is the best option, take the time to sit down and discuss your situation with a bankruptcy attorney. If bankruptcy is something that can not be avoided, then by all means do so. If your quality of life can be improved by eliminating or restructuring of debt, by all means do so.

Take advantage of the fresh start offered to you by the movement and begin rebuilding your credit. It may be difficult at first, but healthy habits of money management will certainly prevent getting into debt again.;u=111947;;u=2586;u=111938

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