HOW CHAPTER 7 AFFECTS YOUR CREDIT

Most people fear filing for bankruptcy because of the negative stigma attached to it, but they also fear that their credit will be ruined forever. Filing for Chapter 7 bankruptcy does have an impact on credit, but it does not affect a person forever. If you are considering filing but are afraid you will never get a loan again, you should understand the effects Chapter 7 has on credit, as well as the steps you can take to begin rebuilding your credit right away. Effects On Credit Report After you file for Chapter 7, the bankruptcy court will post the bankruptcy filing on your credit report. Bankruptcy is listed as a public record, which is considered a derogatory item on a credit report. This posting will remain on your report for 10 years, and there is nothing you can do to remove it from your credit report. As soon as this posts to your credit file, it could cause a decrease in your credit score; however, your score might not decrease as much as you think. You might already have a low credit score if you are in bad financial shape. Any of the following things can decrease your score:
- Late payments to credit cards
- Maxed-out credit lines
- Repossession of a car
- Debts that went to collections
- Past-due child support, alimony, or tax debts
- Dispute inaccuracies on your credit report – You should begin the process by obtaining a copy of your credit report. When you get this, look it over carefully and dispute items that are not correct. You must dispute each inaccurate item with each credit bureau that lists the item. While this process takes time, it is easy to do. Simply follow the directions each bureau offers.
- Get a secured credit card – Next, apply for a secured credit card. This is a credit card that requires a deposit. After you make the initial deposit, you get a credit card you can use for purchases. The nice part about this is that it helps rebuild your payment history by adding positive information each time you use the card and pay it off.
- Get a car loan – Adding a car loan will also add positive information to your credit report, and any positive information increases your score. If you cannot get a car loan yourself, see if you can find a cosigner to help you get one.
- Pay all your bills – Finally, make sure you pay every bill you have on time and avoid racking up new debt.








