If you are contemplating on filing a bankruptcy, probably you have several dings already on your credit report and you are left wondering how much your credit score could plunge if you file for bankruptcy. Furthermore, a bankruptcy is so public and could have a deep effect on your reputation. Bankruptcies are published in the local papers and the proceedings are also held in open court.
Although a bankruptcy allows you to wipe out your debts, it definitely does not clear your credit report right away. Upon declaring bankruptcy, your score an fall up to 100 to 300 points depending on the duration of time you waited to file after you are unable to pay for your debts.
It is vital to determine its effect on your credit score and your credit ratings and your personal situation and future plans. Remember that your credit score is important not only for gaining addition credit such as a car loan or mortgage, but also for insurance, employment and utilities as well.
If you have been declared bankrupt then you should declare this status when applying for a $1,000 credit or more. Failure to do this is a criminal offense. Bankruptcy makes it more difficult to conduct business since getting a credit is almost impossible.
Bankruptcy can also affect your ability to get a new job, secure a mortgage or approved of a new rental. Depending on the kind of debts that you have, filing a bankruptcy may not make sense to it is necessary to talk to a bankruptcy lawyer or get a free bankruptcy review to give further details.
Although bankruptcy on your report will be taken into account by possible lenders, there are also discharges which could have a far worse effect on your credit score than collection accounts. These accounts could remain on your credit report for seven years.
The extent on which you score is affected will also depend on which chapter bankruptcy you filed. Chapter 7 bankruptcy will be reported on your score for ten years. A Chapter 13 bankruptcy is reported for seven years. You will be obligated to answer “yes” on some personal financial statements that ask if you have ever filed for bankruptcy. This does not necessarily mean that your credit will be damaged permanently, but answering “no” could be considered as fraud in some instances.
The remarkable thing when filing a bankruptcy that while a Chapter 7 does more harm to the creditors involved, you are most likely to be extended a credit after three years of filing a Chapter 7 than a Chapter 13 bankruptcy. The reason is simply because your credit history is just one part of the credit score, and having no debt and having disposable income is more important to your credit worthiness than marginal credit benefits of a Chapter 13 bankruptcy.
If you have filed for bankruptcy recently, for years you will be subject to rejections for any kind of loans, mortgages and credit card offers. Consumers who have declared bankruptcy are considered at higher risk by default, and even if they are approved for certain offer, they are still subjected to the highest rate of interest.