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Rebuilding your credit after bankruptcy

For many Tennesseans squeezed by debt, the idea of filing for Chapter 13 bankruptcy is tempting. But some balk at actually filing for bankruptcy because of worries over the bankruptcy's effect on their credit. Such a worry is often overrated for a couple reasons. First, if a person is struggling to keep current with their debt, then chances are that their credit score is in the process of plummeting anyway. Second, rebuilding their credit score after bankruptcy may not be as difficult as they think.

To understand how a person's credit can rebound following a bankruptcy, it is important to know how the credit bureaus that create credit scores develop those scores. They do so by collecting a range of information about individuals. They find the information from two main sources: creditors and public records. Creditors will often give credit bureaus information about a person's past and present credit history such as their credit limit, how much credit they have used and their payment history. Meanwhile, public records turn up liens, bankruptcies and overdue child-support payments, among other things.

But just because credit bureaus will normally uncover a person's bankruptcy through public records does not mean that the bankruptcy will forever sink a person's credit score. That is true for two reasons. First, there is a time limit for how long credit bureaus can report negative information. In the case of Chapter 13 bankruptcy, that limit is usually seven years. Second, following bankruptcy Tennesseans can immediately begin taking steps to rebuild their credit such as obtaining a new credit card - assuming the person makes their payments on time. Getting a card can often be done by having someone else co-sign for the card or, more likely, by getting what is called a secured credit card. A secured credit card is a card in which the person has a credit limit is tied to how much money they have in their bank account.

Tennesseans interested in researching their options further may benefit from speaking with an experienced bankruptcy attorney.

Source: FindLaw, "Rebuilding Credit FAQs," Accessed Dec. 6, 2016

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
Phone: 423-933-1606
Fax: 423-877-0363
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