My mother is thinking about filing bankruptcy and I have heard so many conflicted stories about what it can do for your credit, some say good, some say bad..Please share your personal stories and experiences with me.
Thanks
2007-11-01 16:53:03 · 9 answers · asked by ? 2 in Business & Finance ➔ Credit
I went through this back in 2001 and it really depends on how you manage your credit after the bankruptcy.
True, it doe's show on your credit for 10-years and at first your score takes a huge hit 100-150 points depending on what makes up your score.
But, it also gives you a fresh start and there are several lenders out there that have bankruptcy programs for buying cars and getting credit cards.
I was lucky, I had a existing loan with Ford that I reaffirmed on and made sure they continued to report to the credit bureaus after the BK was discharged, this plus 2-credit cards that I got after the discharge allowed me to buy a new car 1-year later with no money down and 3.9% interest.
1-year later I bought a home with no money down, 100% financeing at 6.5% fixed interest.
Even though the BK still shows on my credit report, my score is over 750 and I can get any type of loan I want at the best rates.
So, like I said, it depends on how you manage your credit after the BK that really matters.
2007-11-02 02:24:20 · answer #1 · answered by ? 7 · 3⤊ 0⤋
Let me clear up some of the bad info here.
Chapter 13 does NOT look better on your credit reports then a Chapter 7. Creditors do NOT care that you are attempting to pay back your debt.....it's still a bankruptcy to them. Therefore, if at all possible, you ALWAYS try to get Chapter 7.
If you plan to file bankruptcy, and IF you do it right and find someone who knows what they are doing, the impact will not be that bad. You can easily get credit again within a couple of years.
I'm working with someone right now who filed for BK13 2 years ago....they now have a 680 credit rating. It will be going up some more once the lawsuits we are filing are served...have a couple of creditors who refuse to update the credit report.
2007-11-02 05:24:38 · answer #2 · answered by Anonymous · 1⤊ 0⤋
It is initially going to be negative on the credit, but at the same time will improve her debt to income ratio. She will be able to start rebuilding her credit right away and should be able to get back to a decent credit level after about 2 years if she is diligent.
She'll be able to get a very high interest credit card immediately after (people just emerging from bankruptcy get inundated with credit card offers due to the fact they can't file again for 8 years), so that is a good way to rebuild credit as long as she uses it responsibly (ie only spend as much as she can pay in full every month).
2007-11-02 08:29:24 · answer #3 · answered by Lesley 5 · 0⤊ 0⤋
One thing that hasn't been addressed in your question is this,
has your mother tried to work out any form of payment aggreement with her debtors? Also, it shows that she is attempting to repay her debts. This also can be done, by trying Chapter 13. This doesn't wipe out the debts, but it gives her relief and time to repay her debts. Chapter 13 and Chapter 7 will always show up on your credit, but of the two and depending on circumstances if she could go the Chapter 13 route, they would set up a payment plan for her to pay her debts to the court in one payment a month. If she follows the agreement every month, she will show good intentions in resolving her credit issues and this will help her credit standing. I would recommend her talking to a credit counselor. They have a lot of good advice and can help her as well. I would try these things first before I took bankruptcy. If it's not workable, then may need to go the bankruptcy route. hope everything turns out okay for your mother.
2007-11-01 17:26:49 · answer #4 · answered by Sunny louise 4 · 0⤊ 1⤋
Bankruptcy stays on your credit report for 10 years. It doesn't help your credit score. But is does give you relief from excessive debt and a way to start fresh.
2007-11-01 17:02:52 · answer #5 · answered by bdancer222 7 · 1⤊ 0⤋
Use your common sense. Do you think that filing for bankruptcy is going to want to make people lend you money?
Bankruptcy is one of the worst things for your credit score. Think very carefully before filing for bankruptcy if you want to get any major loans anytime soon. Bankruptcy stays on your credit report for 10 years.
2007-11-01 23:00:26 · answer #6 · answered by Anonymous · 0⤊ 5⤋
It hurts your credit report for 10 years and then when you go apply for something, its hard to get loans b/c you are starting fresh and dont have much of a histroy. Then again,as much as I would advise against bankruptcy sometimes it is the bst option
2007-11-01 17:15:45 · answer #7 · answered by girlygurl23 2 · 0⤊ 6⤋
It is a hit, but it is also a fresh start where she can rebuild her credit without a bunch of old noncollectable stuff dragging her down.
2007-11-01 17:00:51 · answer #8 · answered by Anonymous · 2⤊ 4⤋
you can forget ever getting anything again...it kills your credit it never truly goes away even after its discharged you get the high credit rate..its horrible if you can help her find another way do so
2007-11-01 17:21:20 · answer #9 · answered by bailie28 7 · 0⤊ 7⤋