Credit Score After Bankruptcy

Your credit score after bankruptcy is probably going to be better then you think. A great number of Oklahoman’s struggle for years paying minimum payments while interest and penalties mount.

 They often wonder about the impact on there credit score after bankruptcy.  As your family falls further into debt, the family may make difficult financial sacrifices, surrender valuable assets and cope with mounting anxiety and uncertainty about the future.  Ironically, a significant number of families in Oklahoma that endure these hardships could immediately improve their situation by filing a Chapter 7 or Chapter 13 bankruptcy in Oklahoma.  Bankruptcy can prevent crippling judgment enforcement procedures.  But some debtors delaying filing for bankruptcy based on concerns about permanent irreparable damage to their credit score after bankruptcy.  However, a chapter 7 bankruptcy discharge is often the most effective way to begin rebuilding your credit.

Things Aren’t Always What we Think:

While some Oklahoma consumers are under the impression that “paying something” is a better way to preserve one’s credit than filing bankruptcy, this assumption is not necessarily accurate.  Each late payment and account write-down will continue to damage your credit standing.  If you are sinking further in debt while struggling to send minimum payments, you may simply delay the inevitable.  Balances will mount as interest compounds, penalties accrue and late fees accumulate.

Paying the minimum payments under constant threat of lawsuits may only result in delaying bankruptcy in Oklahoma.  The instant you secure a Chapter 7 or Chapter 13 bankruptcy discharge, you will have a greatly improved income to debt ratio. This lowering of debt ratios is a major factor impacting your credit score after bankruptcy.

Things are Starting to Go Your Way:

This is because you will no longer be legally required to pay most if not all of your unsecured debts.  This include: expenses related to hospitalization and medical care, credit card balances, past due utility bills and most other types of unsecured debt.  Further, the late payments or non-payments being reported on your credit will stop and be replaced with the notation “this debt discharged in bankruptcy”.  Since the new Bankruptcy Laws requires you to wait eight years between filing many creditors may lend you money as another filing is not imminent. while your debt to incomes ratio is perhaps better then it has ever been.

Hows Your Current Credit Score:

Depending on what your current credit score is your score may take a blow just after filing. However, you have a virtual clean slate to start re-building your credit once you receive your Oklahoma bankruptcy discharge.  Generally, you will begin to receive solicitations for secured credit cards and new car purchases immediately following your bankruptcy discharge.  Credit offers will also begin for mortgages companies offering you second mortgages on homes reaffirmed in your Bankruptcy. Credit cards are more a mechanism for those with credit problems to re-establish credit than a true credit card.

They may come in different forms.  Some may require making a cash deposit to secure the financial obligation.  Others will offer you a small initial line of credit.  Making consistent payments will provide positive post-bankruptcy credit history.  Further, it is important to carefully read applications for hidden fees and charges.  Consumers considering this option also should check to verify that the company or bank reports payments to the credit bureaus.

Its Time to Increase Your Credit Score:

Soon after the Bankruptcy filing, you should start to receive offers for unsecured credit cards.  Especially, true if you build positive credit and avoid late payments or the accumulation of too much debt.  These initial offers for credit will probably be at a bit higher an interest rate.  But, will be different from one creditor to the next. Either way they provide a way to continue to establish positive credit.  Ensure that you do not establish balances with high interest rates that again overwhelm you with debt.

Some people also worry about the impact of a bankruptcy on their ability to buy a home.  However, the same income to debt ratio issues making you attractive to credit card companies, also work to your advantage when buying a home.  Although you must wait to buy a home for a period after a bankruptcy discharge, you may qualify for an FHA home mortgage or two years following a bankruptcy discharge while a conventional loan may be obtained after four years.