Consumer Bankruptcy, Special Education, Real Estate and Title Insurance
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How Bankruptcy Effects Your Credit Scores
Once a person files a Chapter 7 bankruptcy, they immediately reduces their debt-to-income ratio, which is a factor that is considered in determining their credit score. Additionally, the bankruptcy laws limit your ability to eliminate debt through a chapter 7 filing to once every eight years.Thus, to a potential lender, you may actually appear to be a better risk after you have filed a chapter 7 bankruptcy.
Additionally, most Chapter 13 filers will also see a reduction in their debt-to-income ratio, but it may take longer to affect their credit scores.Generally spoeaking, after two to three years of paying their bills on time and maintaining a low level of debt, Chapter 13 debtors may be able to refinance out of a Chapter 13, especially if they have equity in their home. Despite the above, consumers should avoid borrowing money soon after their bankruptcy. It is best to wait until credit scores have improved to 650 or higher in order to get loans with more favorable terms, such as lower interest rates and yearly fees. And be very wary of predatory-lending scams and payday loans. Predatory lenders often seek consumer who have previously filed for bankruptcy and are desparate for credit and then charge them high fees for borrowing money. After bankruptcy, I urge clients to watch their credit reports and credit scores very carefully by obtaining copies of their reports from all of the major credit reporting institutions: Equifax, Experian and TransUnion.
All clients of Bennett & Doherty, P.C. are entitled to a free examination of their credit reports for life.If we find errors such as the reporting of discharged debt as being still owed we may be able to sue the debt collector for money damages.
1456 Ferry Road Suite 603 Doylestown PA 18901 TEL: 215.345.0808 FAX: 215.345.6515
NOTE: We are a debt relief agency. We help people file for relief under the Bankruptcy Code.