how bad will filing for bankrupcty & then dismissing it affect a person credit report, if they want to buy?

Question

a house in the next year , & would it matter if it was chapter 13 or 7

Answer 1

Not a good idea. Listen to your daugher ;-o heheheh!

Answer 2

By 'dismissing' I am assuming you are referring to 'discharging' a bankruptcy.

There are two types of personal bankruptcy, a chapeter 7 and a chapter 13. A chapter 7 is a total liquidation. The debtor declares themselves insolvent (unable to pay back any debt) and are released of all financial obligation listed in the bankruptcy. A chapter 13 is known as a reorganization of debt. In this case a plan is made to pay off debt in a structured manner. Many times the credit companies will lower the amount the individual owes or forego receitp of payment until a later time. In both types of bankruptcy the debtro has the option to 'reaffrim'. Reaffirmation occurs when a debtor has a particular debt removed from the bankruptcy and agrees to pay it as originally agreed. The debt is not included in the bankruptcy. The discharge date is the date the bankruptcy is completed (for lack of a better word). Typically, the discharge date for a chapter 7 is aroound three months from the date of filing and the discharge date for a chapter 13 can be months or even years depending upon the agreement.

So how does it all affect your credit?

For many big ticket items (such as houses) The bankcruptcy must be discharged in order for the lender to even consider the loan. As mentioned above, with a chapter 7 it can be a matter of months versus years with a chapter 13. It also may sound as though a chapter 13 is 'better' than a chapter 7. However, many lenders view bankruptcy as bankruptcy regardless of the type. Many lawyers will urge you to file chapter 13 instead of 7 citing that lenders view a chapter 13 more favorably. This is not exactly true.

Your credit will definately suffer. No doubt about that. If your credit score was high prior to the bankruptcy then it will most certainly take a nose dive. However, if you were struggling before and were 30+ days behind and receiving calls from collectors then it may not affect you that much. There will be a period when the bankruptcy is filed when you will stop making alll debt payments. Your credit report may start reflecting slow pay during this time. By the time it is all said and done it will more likely than not be in pretty poor shape. Managing it well following the bankrucpty can also help. A bankruptcy is reported on your credit for seven years but may only seriously affect your ability to obtain credit for anywhere from 3-4 years. Following that you will qualify only for low credit line, high interest credit cards until your credit score rises and your bankruptcy falls off of the report. Sometimes a bankruptcy will continue to report on yoour credit for more than seven years. Be sure to contact the credit card company and make arrangements to have it removed ASAP. The process can still take a few months before it falls off of the report.

Reaffirming debt is always good. Especially on anything secured (cars, houses etc.). It is also not a bad idea to reaffirm one or two small credit cards. Just make sure you can handle the payments before doing so. Also bear in mind that government loans (such as student loans) can not be bankrupted.

Answer 3

Filing a bankruptcy, either 13 or 7 will hurt your score very back IF your score was good to begin with, but if your score was below 600 to start with, yes it will hava negative affect but you can always come back.

After filing the bankruptcy, wait a couple of months and then go to your bank that you have a cking or savings account with and obtain a $200 or $300 personal loan. Disregard the interest rate, and use the money that you recieve for the loan and pay the loan back. it will start to help build your credit back. you need to show that you are recovering and has learned from this negative experience.

Also try getting a dept store card.. they are fairly easy to get and use every other month for small purchases, say $20-$30 and pay off when the bill comes.
If that does not work, try a secured credit card with a credit limit of $200, and you CAN REQUEST THE CREDIT CARD COMPANY to set your credit limit if they are giving you more then $200 credit~ it would be a safe start~ and use it same as the dept store card.

When you are ready to purchase the house, you may not get the best interest rate, but consider if you maintain good credit and keep building a reliable history with the creditors in about 3 years of purchasing the home you can always refinance for a lower APR.

Best of Luck

Answer 4

I filed about 8 years ago and it still effects me,sometimes I think it was one of the biggest mistakes that I have ever made, high interest rates for anything you want to buy, or being turned down for credit all the time,stays on your record forever it seems like it anyway. Think very carefully before doing it. Chapter 7 isn't as bad, you pay off some of the debt and it looks better to creditors, I have known people who have purchased houses within the year on that one. Good Luck to you