How will bankruptcy affect my credit?
January 3, 2010
Bankruptcies are reported by credit reporting agencies. The number of years for which a bankruptcy will stay on your credit report depends on the type of bankruptcy you filed. A Chapter 7 bankruptcy, for example, will stay on your credit report for 10 years, while a Chapter 13 bankruptcy will be reported for 7 years.
Your credit report is used by credit card companies and lenders to determine your creditworthiness. However, having a bankruptcy on your credit report does not automatically mean that you can’t obtain credit.
Some credit card companies are willing to extend credit to people who have filed bankruptcy. Typically, though, you will have a higher interest rate and/or lower credit limit than someone who has not filed bankruptcy.
It is also worth noting that some creditors will see a person as a better credit risk after they have filed for bankruptcy because they have less debt, they are in a better position to repay new debt and they can’t file a Chapter 7 bankruptcy again for another 8 years. If you filed a Chapter 13 bankruptcy, then you have shown that you can manage regular payments.
If you take the proper steps to responsibly rebuild your credit after you file for bankruptcy, you can improve your credit standing within a few years.
For free legal advice on Texas bankruptcy, contact the law firm of Fears | Nachawati today. To receive free legal assistance from a Texas bankruptcy lawyer, email us or phone us on our toll free number at 1.866.705.7584.