For many people struggling to pay off their debts, Chapter 7 bankruptcy allows you to discharge unsecured debts. It may also give you the fresh start you need to rebuild your credit report.
While filing Chapter 7 will affect your credit score, if you're already struggling with debt there is a good chance your score is lower than you would like. With your debt clear, you may be able to build your credit report up stronger than it was before your filing.
While it may be hard to get a car or home loan immediately after filing, many people get loans after they file.
After you file, its a good idea to start rebuilding your credit so you can start sending positive signs to lenders.
Many people who work to rebuild their credit get car and home loans a year or two after filing.
A healthy credit score plays a vital role in our culture, particularly because so many purchases depend - like cars and homes - on the availability of credit at a reasonable rate.
After bankruptcy, your filing will remain on your credit report for up to 10 years.
The main credit advantage of bankruptcy is that it gives you an opportunity to begin rebuilding your credit with your debt wiped clean. The first two years after filing are particularly important for your post-Chapter 7 bankruptcy credit report.
During this phase, here are a few methods to start improving your credit:
While your post-Chapter 7 bankruptcy credit report will reveal your prior bankruptcy, it will also show the steps you are taking to restart your financial health. Potential lenders are worried about your future ability to pay back loans, not just your past.
As mentioned above, Chapter 7 bankruptcy may allow you to eliminate some or all of your unsecured debts. By doing so, you'll be able to start rebuilding your credit score and make yourself more appealing to potential lenders.
Types of unsecured debt that may be eliminated through bankruptcy include:
In order to receive these benefits of Chapter 7 bankruptcy, your income must be at or below your state's median income, or you must pass the Chapter 7 means test. If, for some reason, you are ineligible for Chapter 7, then Chapter 13 bankruptcy may offer a better tool for you to solve your debt problems.
To learn more about your post-Chapter 7 bankruptcy credit report, and many other debt-related issues, speak with a local Chapter 7 lawyer today.