How long does it take to rebuild credit after filing for bankruptcy?
Bankruptcy will remain on your credit report for ten years if you file Chapter 7 bankruptcy and for seven years if you file Chapter 13 bankruptcy, although the time doesn’t start counting until after the Chapter 13 debt repayment plan has been completed. So if you have filed Chapter 13 bankruptcy and you have a three year repayment plan, the Chapter 13 bankruptcy will be removed from your credit report 7 years from the date you completed the payment plan, which would be 10 years.
Credit score can rise prior to the completion of bankruptcy
It is possible, however, even if the bankruptcy remains on your credit report, that you can immediately take the necessary steps to improve your credit score. For instance, if you start paying on your bills on time, and you get a secured credit card and pay if off each month, your credit score could start to rise within six months to one year.
How long will it take before someone might lend you money? It’s not unusual for many debtors, who take the appropriate steps to raise their credit score, to be able to get an unsecured credit card within a year or two. Keep in mind, the interest rate charged will be higher than the rate charged to other less risky consumers.
How long until you begin to see your credit score rise substantially? Although your credit score will not be great until the bankruptcy is eliminated from your credit report, if you take the right steps you could have a decent credit score within three to five years. It is also a good idea to check your credit report each year and make sure all charges are correct.
Many debtors also wonder when their credit will improve enough to purchase a new home. Buying a new house after bankruptcy can be difficult. If you have had a home foreclosure this information will not be eliminated from your credit report for seven years. You may not have to wait the full seven years to buy a home, but you will need to talk a mortgage broker and discuss your options. As mentioned above, if you have a spotty credit history you will be charged a higher interest rate to borrow money.
Life after bankruptcy
The good news is filing bankruptcy allows for a fresh financial start. Take the right steps immediately following bankruptcy and you can easily rebuild your credit score. The first step is to let go of any feelings of failure. Millions of Americans have declared bankruptcy over the last decades. Many families have suffered a variety of crisis such as high medical expenses, a divorce or a job loss that has put them in a precarious financial position.
Finally, after letting go of the guilt, make sure you understand what circumstances led to your financial crisis. Did you overspend? Did you buy property or assets you could not afford? Or were you simply the victim of an unfortunate circumstance? After you have identified the reason why, then you can figure out how to avoid the same crisis in the future.
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Currently the filing fee to file a Chapter 13 bankruptcy petition is $281, but this does not include lawyer's fees.