How Long Will It Take My Credit To Rebound After Filing For Bankruptcy In Nevada?
Professional Bankruptcy Attorney’s Advice To Improve Your Credit Score After Bankruptcy
A lot of people who are in dire need of the debt relief that bankruptcy protection offers wait far too long to get it (or refuse it outright) because they are worried about what it will do to their credit score. Even though they may not have a lot of funds right now, they still think of a future in which they can buy a home or a new car, and they don’t want to have to wait years and years for that to happen. So, many people just put their heads down and continue to struggle with the debt, unintentionally making their credit even worse and putting off those goals even longer.
Any bankruptcy attorney will tell you that filing for bankruptcy is often the fastest way to get your credit back on track if you are struggling with debt. Bankruptcy is a bit like a reset button that wipes out all those black marks on your credit history and lets you start again.
What Factors Affect Your Credit Score
There are many factors that affect your credit score. The amount of outstanding debt you have is a big factor. The more you have borrowed in relation to your income, the lower your credit score will be. The more you have borrowed in relation to your credit limit, the lower your credit score will also be. As a general rule, you want to try to keep your balances low.
Other factors that negatively impact your credit score include late payments, missed payments, and inquiries, or the number of times you have applied for a new credit card or other line of credit. Making timely payments and limiting your credit applications will bolster your credit score.
Most people who are struggling with debt will have high balances for a long time, which will continue to keep their score low. Many people also try to take out other lines of credit to pay off higher-interest accounts, and that can lead to excess inquiries, hurting their score. And, of course, many people struggling with debt also miss payments or make their payments late. By filing for bankruptcy, you can put an end to all of those issues and stop the constant hits to your credit score.
How Each Chapter Of Bankruptcy Affects Your Credit Score
Different chapters of bankruptcy will affect your credit score differently. Chapter 7 bankruptcy is the kind of bankruptcy that most people have in mind when they think about filing. It totally liquidates, or gets rid of, your unsecured debts, such as credit cards and medical bills. It can take a few months for you to go through the process and get your debts discharged. If your credit score was in the 700s or higher when you filed, you can expect to see a drop of a couple hundred points. But if your credit score was already low, you aren’t likely to see any change (or very little).
Chapter 13 bankruptcy is a debt restructuring plan that puts all your debt into one repayment plan that lasts three to five years. In both Chapter 7 and Chapter 13 bankruptcy, you will usually see an improvement in your score because the bankruptcy improves your debt-to-income ratio by lowering your debt. You won’t see that improvement with Chapter 13 bankruptcy until later since it takes longer for discharge.
Both Chapter 7 and Chapter 13 bankruptcy will remain on your credit report for seven to 10 years.
Things You Can Do To Rebuild Your Credit After Bankruptcy
Fortunately, you can start rebuilding your credit quickly after your bankruptcy is discharged. You may notice that you get a little bump in your score from the bankruptcy alone, depending on how poor your score was previously and how much the bankruptcy helped to reduce your debt-to-income ratio.
You can start rebuilding your credit by paying everything on time, including your phone bill and car insurance. After a few months, try applying for a gas credit card or a store credit card with a small limit. These cards are more forgiving of poor credit scores, so you are likely to have better success when applying for them. Get a small credit limit, and use the card sparingly each month. Pay it off fully each month and on time. You will see a big jump in your credit score in a short time.
If you apply for a card and are rejected, wait a couple of months to apply again. Too many credit inquiries will only bring down your score and make it harder when you apply again.
Always keep a close eye on your monthly budget and spend within your limits. Be careful not to take on too much credit. Start saving what you can so you have a rainy day fund in case you become ill, lose a job, or have any other financial emergencies.
Contact a Top-Rated Bankruptcy Lawyer In North Las Vegas
If you are struggling with debt, don’t put off getting the relief that you need. Call Zero Down Bankruptcy Lawyers of Reno today to learn more about Chapter 7 bankruptcy and Chapter 13 bankruptcy. Our experienced bankruptcy attorneys will help you learn which can give you the maximum debt relief while still meeting your financial goals. We offer a free initial consultation and affordable rates. We also offer payment plan for every budget. Contact us in Reno today to schedule a consultation with a bankruptcy attorney and learn more.
Zero Down Bankruptcy Lawyers Of Reno