YOUR CREDIT REPORT AFTER BANKRUPTCY – WHAT TO LOOK FOR
Insolvency or bankruptcy is the legal term used when an individual publically and legally proclaims his incapability to pay off his debts to his creditors. By announcing his inaptitude to disperse his debts, the debtor initiates a legal proceeding in which his assets are sealed for the reimbursement of creditors’ claims through which most of the debts are paid off.
The biggest disadvantage of declaring the bankruptcy is that it makes it impossible for the debtor to borrow again in his times of need. In some jurisdictions, after several years, in most cases it is seven years and sometimes it is ten years, the debt and the bankruptcy charge is removed. But meanwhile the post bankruptcy credit report will show your bankruptcy charges and will affect your credit history.
Post bankruptcy credit report is the first document that you should look for after receiving the bankruptcy release documents. It is important that the post bankruptcy credit report is accurate in all the details. If you do not check the credit report immediately and later find out that it had some mistakes then it would take a long time and a lengthy procedure to get the report corrected.
The following are some fine points that you should check if they are correct in the post bankruptcy credit report or not:
- The date when the bankruptcy was filed
- The date when the bankruptcy was discharged
- All the creditors showing a $0 balance
- A claim from the creditors indicating that they were included in the bankruptcy with $0.00 remaining balance.
- There aren’t any profit or loss charges as they can reduce your overall credit score.
- Your credit report may also show your late payments
The most important point is to consider and check is that your outstanding balance towards your creditor is nil. If any of your creditors who were included in the bankruptcy are showing a balance then it is very important to get this error corrected. You should contact creditors and ask them to correct and update the information in your credit report so that it reflects the true credit score. If an outstanding balance is shown for a creditor in your post bankruptcy credit report then it will decrease your credit score.
On the whole, the credit score of a person actually increases after filing for bankruptcy. The reason is very simple. When a person files for bankruptcy, all his liabilities are paid off by dispersing his assets and his credit report shows a discharge of profit and loss leaving behind a $00.00 balance.
Filing for the bankruptcy can be a crucial decision for an individual as this can affect their credit history and will remain a part of their credit reports for several years. But in the cases of most people the credit score after filing for bankruptcy is not as bad as expected. To begin with, if you had to file bankruptcy, the credit score wouldn’t be any good.
So, your credit score might already be declining because of late or no payments of the debts. In fact for some people filing bankruptcy can be a starting point and from here they can start with $0.00 outstanding debts and as a result a better credit score.
