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Credit Scores after Bankruptcy

Posted on in Bankruptcy

For people considering bankruptcy, a major concern is how badly your credit score will be affected. Since bankruptcy stays on a debtor's record for either 7 or 10 years, it is a reasonable concern. Since Chapter 7 bankruptcy wipes out debts, it stays on your record for a longer time for at most ten years. Chapter 13 bankruptcy is a payment plan that is more controlled, so it only stays on record for up to seven years

What isn't as thought about is the debtor's credit report before bankruptcy. Rod Griffin, a spokesman for credit bureau Experian said that “in virtually every instance, the consumer will already have repayment problems such as late payments, very high balances, charged-off accounts, or collection accounts.” The hard truth is that a bankruptcy may positively affect a debtor's credit long term.

A good example of how a credit score is calculated is by understanding how the scores are calculated. Fair Isaac creates a consumer's FICO score, which is the most widely used score. First, consumers are divided into ten groups of people in similar circumstances. Out of these groups, people are compared, so those who have declared as well. Debtors are not compared to people with immaculate credit scores.

In order to decide about filing for bankruptcy get as much information as you can. The best information comes from bankruptcy attorneys who know the bankruptcy laws in your state. Contact an experienced bankruptcy lawyer in Cook County to discuss the advantages of filing for bankruptcy.

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