When considering options for debt relief, it is important to be aware of the impact your choices may have upon your credit score. There are various factors that influence a credit score rating, and while filing for bankruptcy will undoubtedly lower your credit score, having your debts go to collection agencies will also have a negative impact. It is not unusual for a credit score to go up as much as 100 points within 12 months after filing a Chapter 7 bankruptcy. In some instances a debtor’s credit score has increased as such as 150 points within the 12 month post-filing-period. If you find it difficult to understand all your debt relief options, Brent George Law in Ventura County is here to help.
Chapter 7 vs Chapter 13
The two types of bankruptcy used for personal debts are Chapter 7 and Chapter 13. How many points they knock off your credit score is partly based on how good your score is prior to filing. Higher scores tend to fall farther than lower scores, although other factors such as the amount and type of debt also play a role. The drop in the credit score can range from 150 to 260 points. The main difference between Chapter 7 and Chapter 13 is how long they stay on your credit report. Chapter 13 may be on your report for seven years and Chapter 7 lasts as long as 10 years.
There are some steps What can you do after a bankruptcy to improve your credit score? The first step is to monitor your credit report on a regular basis. Check it for inaccuracies and make sure that as your debts are discharged they are no longer listed as delinquent on your credit report. You should apply for credit that has less stringent requirements, such as car loans and department store cards. Also keep your older lines of credit active, if possible. That credit card you’ve had for 20 years gives you extra points on your credit score for the length of its credit history. With careful and judicious use of credit, after a few years you can emerge from your Chapter 7 or Chapter 13 filing with better financial health.
Be sure to seek professional help when dealing with debt. Brent George Law can assist you in wading through all your options. They have the experience and qualifications to advise you with your finances. It is difficult to live without good credit. Everything from renting a home, getting a job, and buying furniture on the installment plan can be affected by your credit rating. No one plans for a bankruptcy, but it may give you the clean slate you need to start over. With Brent George Law of Ventura County on your side you can get the competent help you need to make an informed decision.