Bankruptcy As Last Option To Improve Credit Reports

After viewing your credit report and you find that you still have a long way to go before you can improve it

, what do you do? You may consider credit counseling or filing a bankruptcy. However, bankruptcy should be your last option. This means that you have exhausted every legal option available but your credit report remains the same. If you are really sure that you are prepared for the consequences of such action should only be the time that you go for it.

If you have done everything yet you cannot improve your credit score forcing you to resort to bankruptcy, you should at least be informed about it. Bankruptcy stays on your record for ten years and it can make it hard for you to get a good credit, purchase a home, get a life insurance or even get employed. Personal bankruptcy can, however, help you get a fresh start because if you follow the bankruptcy rules then you receive a discharge. A discharge is a court order that relieves you from having to repay certain debts.

Personal bankruptcy has two primary types which are Chapter 13 and Chapter 7. Both should be filed in a federal bankruptcy court. You have to pay some fees in the process, currently the fee is a total of $160. They charge $130 for filing fee and $30 for administrative fee. In addition, you would pay separately for attorney fees. Filing bankruptcy to help you get better scores are really what other scammers suggest when they say they can fix your credit report. Experts advise people strongly against this due to the consequences that go along with it.

Chapter 13 of personal bankruptcy will allow you to keep your property for as long as you have a regular income and limited debt. Though this negative information may still stay in your credit report for ten years, you will have to have a repayment plan approved by the court. This plan should allow you to pay off a default within a period of three to five years instead of surrendering your property.

In Chapter 7 or "straight bankruptcy" you will be liquidating all assets that are not exempt such as cars, work-related tools and basic household furnishings. Still, some property may be sold by a court-appointed official (trustee) or turned over to creditors. In this chapter, the discharge of your debts will only be received by you once every six years. Bankruptcy does not really help you get better scores but it can help you stop your creditors from hounding you. This is along the lines of the possible consequences previously mentioned. In the end, you may lose all your property to creditors just the same.

by: Leo Chu

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