Bankruptcy and Your Credit
In today’s world, many people are facing a financial crisis and bankruptcy might ultimately be the necessary path for getting your finances and credit in order. In view of the fact that bankruptcy is a big decision, before considering whether bankruptcy is the right choice for your situation, you should give thought to the long-term financial picture of your life. As you consider the option of bankruptcy, take a realistic approach about your ability to get out of debt. Remember, paying only minimum monthly payments will barely make a dent in the overall amounts owed, while in contrast bankruptcy offers immediate solutions. Another way to view bankruptcy is to consider whether taking action today will improve your future credit prospects. If so, you should consider bankruptcy. Filing for bankruptcy can ultimately help your short term and long term credit worthiness. To learn more about the bankruptcy process, contact the offices of York and Associates to set up a consultation regarding your specific situation.
Your Credit Score
Bankruptcy can help your credit score over the short term and long term. The company that produces the formula to obtain a credit score (KNOWN as a FICO score) actually compares you with consumers in a similar financial position. Consumers are divided into several different groups and one of the groups is bankruptcy filers.
As a result, your credit score is obtained by comparing you with other bankruptcy filers and not with someone who has a perfect credit history. Therefore, credit scores among bankruptcy filers can vary widely and can actually be quite high based on your credit performance with respect to other bankruptcy filers.
Rebuilding Your Credit
Make sure to do the following to help rebuild your credit after the bankruptcy case has been filed:
- Verify that all accounts that are listed on your bankruptcy case actually are reflected on your credit report as being covered by your bankruptcy case. If they are not listed as such, then your credit could suffer if you are still shown as being delinquent on your payments.
- Try to be listed on a trusted person’s credit card as an authorized user. You would not be a signer or co-signer on the account and so ultimately the debt on the card is not yours. Your bankruptcy would not affect the signer or co-signer on the account either. However, the good account history would reflect on your credit report.
- Obtain another credit card or a secured credit card that you always stay current on (a secured credit card requires a cash deposit that becomes the credit line).
- Stay current on your house/rent payment, car payment, and other monthly payments.
Simple things as the above can go a long way in improving your credit. Please see What Happens in Chapter 7 and What Happens in Chapter 13 for more comments on bankruptcy and credit.
Contact Us With Any Questions
You might have more questions on bankruptcy and credit. Mr. York is ready to answer all your questions. Contact us at any time. We offer flexible payment plans to meet your financial needs.