Mar 05, · Dear Speaking of Credit, I filed for bankruptcy in July , and it was discharged in September My current credit score is Currently on my credit report: 1st/2nd mortgages, a car note, one credit card with a limit of $ A week ago to the day (7/16/17), my wife accidentally used one of the credit cards that had a $0 balance before we filed for bankruptcy. The creditor has not closed the account. I regularly log into the few accounts that had a $0 balance before filing, just to make sure nothing funny happens - . Aug 06, · If you've obtained a recent copy of your Experian credit report and found that the bankruptcy discharge information is not yet appearing, you can request that the information be updated. Your bankruptcy records should include a document, called a "schedule," that lists all of the debts included in the bankruptcy filing.
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Kevin Chern, a bankruptcy attorney in Chicago, says that when a person files Chapter 7 liquidation bankruptcy, the debtor immediately and dramatically reduces his or her debt-to-income ratio. In the eyes of a potential lender, you may actually appear to be a better risk immediately.
In many cases, after 18 months of regular Chapter 13 payments, a debtor can refinance out of a Chapter 13, especially if the debtor has any equity in a home. You can check it for free at myBankrate. Bankruptcy experts advise consumers to try not to borrow money too quickly.
Instead, they should make timely payments every month to help re-establish their credit and get loans on more favorable terms. Save pennies or change if you have no room in your budget and you are paying off debt. Be sure to watch out for predatory-lending scams and payday loans.
Predatory lenders seek credit-impaired consumers and charge them exorbitant fees for borrowing money. Payday loans let consumers postdate a check for the amount of the loan and the fees for taking out the loan. Those fees are the killer. Bankrupt consumers should keep a close eye on their credit reports and credit scores. The consumers should get a copy of their reports from all of the major credit reporting institutions: Equifax, Experian and TransUnion.
So how much will a bankruptcy hurt your credit score? Fair Isaac Corp. In these two scenarios, a bankruptcy filing can lower a credit score by as much as points.
Experts say that after bankruptcy the degree of improvement in a score will vary. A bankruptcy can remain on your credit report — and thus impact your credit score — for up to 10 years. One way to start improving your credit is to open a secured credit card account right after you are discharged from a bankruptcy.
Simply head to a bank, fill out an application and make a deposit into a secured account. The Federal Trade Commission says that the bank will usually pay interest on your deposit. However, many secured cards come with an annual fee. Compare the total fees required before signing anything. The company reviews unsecured accounts periodically for upgrade and if you are upgraded to an unsecured card, it will refund the security deposit. Ultimately, the time at which a bankrupt consumer can purchase a home or a car varies from lender to lender.
Most experts say that it will take 18 to 24 months before a bankrupt consumer, who has re-established good credit, can secure a mortgage loan after personal bankruptcy discharge. Credit-impaired borrowers should prepare to pay interest rates that are 2 points to 3 points over conventional rates. Singer suggests bankrupt consumers educate themselves about different mortgage programs, talk with a real estate agent to help find a lender that is right for their situations and check with the Better Business Bureau to identify whether lenders are in good standing.
Consumers can view how their credit scores impact the interest paid on a loan by using the loan savings calculator on MyFICO.
Loan representatives at E-Loan, an online lender, examine factors that include credit score, income and debt-to-income ratio. The Federal Housing Administration, or FHA, which insures residential mortgage loans — especially first-time homebuyers and those with low-to-moderate income — has specific procedures for bankrupt consumers and special considerations for those who have ended up in bankruptcy because of unfortunate circumstances that could include serious illness or death of a wage earner.
However, the FHA will allow a borrower to obtain the mortgage after one year if they can show they are responsible with their financial affairs, the bankruptcy was caused by circumstances beyond their control and that the circumstances are not likely to occur again.
The lender might be able to make an exception if the foreclosure resulted from circumstances beyond the control of the borrower and the person has re-established good credit since the foreclosure. The discharge date is the date the bankruptcy plan is completed after being filed. But, the discharge date has nothing to do with when the information will be deleted. In fact, it is quite possible that the information has already been deleted.
The bankruptcy public record is deleted from the credit report either seven years or 10 years from the filing date of the bankruptcy, depending on the chapter you filed. Chapter 13 bankruptcy is deleted seven years from the filing date because it requires at least a partial repayment of the debts you owe. Chapter 7 bankruptcy is deleted 10 years from the filing date because none of the debt is repaid. Individual accounts included in both Chapter 7 and Chapter 13 bankruptcy can remain on the credit report for seven years.
Usually, a person declaring bankruptcy already is having serious difficulty paying their debts. Accounts are often seriously delinquent before the bankruptcy. If an account was delinquent when it was included in the bankruptcy, it will be deleted seven years from its original delinquency date , which is the date the account first became late and was never again brought current.
Declaring bankruptcy does not alter the original delinquency date or extend the time the account remains on the credit report.
If you haven't already, I encourage you to get a current copy of your credit report. You can order your free report from each of the three credit reporting companies once every 12 months.
You can also request your free credit report from Experian at any time. You might find the information regarding your bankruptcy is already gone. Stay up-to-date with your latest credit information for free and learn what lenders might see when reviewing your credit. Editorial Policy: The information contained in Ask Experian is for educational purposes only and is not legal advice. Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities.
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