Have You Heard You Can’t Get Credit For 10 Years After Filing Bankruptcy?
By Susanne Robicsek, North Carolina Bankruptcy Attorney on Aug 5, 2007 in Benefits of Bankruptcy, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, General Bankruptcy Information, North Carolina
It is not true that people can’t get credit for 10 years if they file for bankruptcy. Credit can be given as soon as someone files a bankruptcy case. Creditors are free to lend money, or not to lend money, to whomever they chose.
There is nothing in the bankruptcy laws that forbid people who have gone through (finished) bankruptcy from borrowing money, although if someone is in an active Chapter 13, they might be forbidden from borrowing money without court permission.
A bankruptcy filing will be listed on a credit report for 10 years, and it will affect credit ratings negatively. Just like anyone with negative marks on their credit report, people who have filed for bankruptcy have to deal with a bad credit rating. Once a Chapter 7 or Chapter 13 discharge is entered, it is important that people work hard to improve their credit score after they file bankruptcy.
All sorts of people look at credit reports. Some lenders or employers will see a bankruptcy and will want to see that some time has passed and the credit score improved since filing. It is possible that they may refuse to work with someone because of the bankruptcy and/or credit score.
Other lenders actually look for people who have filed bankruptcy because they know that people with bad credit ratings will pay more for credit. They also know that people who filed bankruptcy are limited in being able to file again in the near future, so if they lend them money the borrower probably won’t be able to file bankruptcy against the debt. Some lenders also realize that someone who just filed bankruptcy won’t owe many other creditors and are probably in a good position to make payments.
Filing for bankruptcy certainly won’t make a credit rating better, and it won’t “clean up” a report either. It will make it harder to get credit, but it can also make it easier to start rebuilding credit since the discharged debts will no longer be reporting as late each month.
See also:
How Important Is Your Credit Report After Bankruptcy by Carmen Dellutri
Will I Ever Be Able To Get Credit Again by Dana Wilkonson
Filing For Bankruptcy Can Help My Credit Score? by Kevin Gipson
Will My Spouse’s Bankruptcy Hurt My Credit Score? by Carmen Dellutri
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