Bankruptcy can have several impacts some good some not so great. The good can be relief from the pestering lenders for recouping their investment, some discharge, some new starts on a clean slate, and what not. However, the biggest drawback in bankruptcy is with respect to the credit score. A credit score is hurt significantly during bankruptcy. The impact can depend on chapter 7 or chapter 13 and the net discharged amount. The higher the amount discharged, the bigger damage it leads to the credit score. To know more about the flaws and advantages of bankruptcy log on to https://www.recoverylawgroup.com/bankruptcy/.
How does a bankruptcy show up?
All the discharged debts show up on the credit score with a $0 due but have a mention about how the debts were discharged (that is through bankruptcy procedures). This is a public record that every lender shall access in the future before providing credit. Since the borrower has availed debt discharge and the financial status of the borrower is not very good and stable, there are chances lenders might just not consider any unsecured debt. If the offers for debt are made, the interest rate and terms might be unreasonable.
There is another government record that will list the names of all individuals or businesses who apply for bankruptcy. Being listed on this record is certainly not a matter of grace, even though not many people would look up the record.
How to make a recovery?
Recovery of credit score is a long process. Even though planned well it can take about 1-2 years to achieve a reasonable credit score. The first step should be stabilizing and managing the remaining debts appropriately after bankruptcy. Post stabilization, the efforts to improve the credit score can take place. A bankruptcy filer must aim to avail of secured credit cards and pay bills early before time consistently for at least a few months. A careful assessment of how much limit to be used and when to avail of a new credit card needs to be planned appropriately. Ideally, it might take up to 3 credit cards and a time span of about 18-24 months to reach a score of 700.
To understand more about bankruptcy and its implications, dial 888-297-6203 to connect with top Los Angeles & Dallas, TX-based attorneys.