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Bankruptcy and Your Credit Score

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Title: Bankruptcy and Your Credit Score


1
Bankruptcy and Your Credit Score
Understanding the Basics
2
Bankruptcy Chapters
3
An individual may file bankruptcy under chapter
7, 11, 12 or 13 of US Bankruptcy Code
4
1
Chapter 11 Bankruptcy
5
Typically used by small businesses
6
2
Chapter 12 Bankruptcy
7
Family farmers or fishermen
8
3
Chapter 13 Bankruptcy
9
  • Wage earner plan
  • Rarely used is a three to five year wage
    garnishment

10
  • Wage earner plan
  • Is a three to five year wage garnishment

11
4
Chapter 7 Bankruptcy
12
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13
Bankruptcy Timelines
14
Not all bankruptcies are the same with regard to
time lines
15
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16
Credit ScoreDate of Filing Bankruptcy
17
Almost all unsecured debts are discharged in a
Chapter 7 bankruptcy in 3 ½ months leaving you
able to work on paying bills and increasing the
credit score
18
Most credit scores improve after Chapter 7
19
Credit Score after Discharge
20
A debtors credit score may actually increase
noticeably right after the bankruptcy is
discharged
21
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22
Long-Term Impact on Credit Score
23
How bankruptcy impacts a debtors credit score in
the long run depends on a variety of factors
24
1
Discharged debts will remain on report but show
as discharged
25
Lenders place differing levels of importance on a
previous bankruptcy
2
26
Debtor needs to have stable employment and
sufficient income
3
27
Credit cards, car loans, and other types of
credit may be available during and after Chapter
7 discharge
4
28
Mortgage Loans after Bankruptcy
29
With a steady income, most individuals can apply
for an FHA loan within two years a chapter 7
discharge
30
Depends on what type of bankruptcy filed
31
Depends on what type of bankruptcy filed
Typically takes at least 2 years before debtor
can qualify for a mortgage after Chapter 7
discharge
32
Debtor may qualify for FHA mortgage after one
year of payments in a chapter 13 or two years
after Chapter 7 discharge
Depends on what type of bankruptcy filed
Typically takes at least 2 years before debtor
can qualify for a mortgage after Chapter 7
discharge
33
Credit after Bankruptcy
34
Debtor should not shy away from all credit after
bankruptcy
35
Be cautious and selective but apply for at least
one credit card after bankruptcy
36
May need to obtain a secured credit card
37
Use the card sparingly
38
Pay it off each monthPay it off on time
39
Ways to Improve Credit Score after Bankruptcy
40
A debtor can take numerous steps to help increase
his or her credit score after a bankruptcy
41
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42
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43
Want to Know More About Bankruptcy and Its Effect
on Your Credit Score?
44
Get Your Bankruptcy Questions Answered
Click to visit centraltexasbankruptcy.com
Content provided by Best Legal Practices
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