Post Bankruptcy Credit Score- Role Of Credit Score After Bankruptcy

Post Bankruptcy Credit Score- Role Of Credit Score After Bankruptcy

Bankruptcy is the state of complete loss. The debtor is left penny less and hence unable to pay out his creditors. In other words bankruptcy is the debtor's inability to pay his bill when they become due. This is governed by the Bankruptcy act. A bankruptcy petition is filed by the debtor in the bankruptcy court. After thorough investigation the insolvent person is declared bankrupt by the bankruptcy court. In Bankruptcy, the debtor is relieved of all his assets and liabilities and is given a fresh start. Any available assets are liquidated the proceeds are first distributed to the secured creditors and then to the unsecured creditors. Once the debtor restarts to overcome his financial ruin, the following are the questions that pop up in his mind. Will I be able to have a credit card? If there are any outstanding bills in the credit card, then this has to be revealed at the time of filing bankruptcy. This credit card will also be listed as a debt. If there are no outstanding bills at the time of filing then we need not inform the credit card company. However, the bank may get to know of our filing through some other sources and may immediately cancel the card. But still most of the credit card companies allow us to use the same card after bankruptcy, if we agree to sign a fresh agreement. It is wise for us to avail this option, as the bankruptcy discharged debtors are mostly denied in issuance of new credit cards. Will I be able to get a new credit record? In today's competitive world, credit facilities are available to bankrupt debtors also. But the cost of credit is higher. It means that the interest rate is higher and also the lending amount is very much limited and restricted. But it's sure that even bankrupt debtors can avail loan. Will I be able to own a home? Yes the bankruptcy filed debtor can absolutely own a house. After 15-30 months of discharge of bankruptcy the debtors can apply for a loan on the same note as if they have not filed bankruptcy. But the creditor will be more concerned on the terms of our payment. He will have a thorough analysis on the debtor's stability of income. Since the debtor has overcome a financial trouble a detailed study of the current net worth of the borrower will be made by the lender. Will bankruptcy filing damage my credit record? Actually it's always better to file bankruptcy than to face the numerous financial crises. Hence it's generally considered that bankruptcy is not harmful. Time and then it is always essential to analyze one's own net worth after getting a fresh start from bankruptcy instead of availing loans. Filing Bankruptcy will not delete the list of old creditors in our credit history. So always ensure that the bankruptcy discharge is also noted in the credit report, so that the new creditors can understand that these old creditors do not have any claim on us.

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