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Christopher Todd Morrison, P.C.
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Understanding bankruptcy and the credit report

For people in Texas struggling with the burden of overwhelming debt, bankruptcy can be a real solution to help create a way out of a difficult situation. However, when considering filing for bankruptcy, it is important for a person to have an accurate and thorough understanding of how this process will affect his or her credit in the near future and the long term. Filing for bankruptcy is a serious action that can enable people to pay off their debts and get some relief, but it can also cause their credit scores to drop by 200 points.

While many people believe that the impact of a bankruptcy on a person's credit report lasts for 10 years, in many cases, that number is lower. Only a Chapter 7 bankruptcy remains on a credit report for 10 years; Chapter 13 bankruptcy items and information about accounts discharged on bankruptcy only remain on a credit record for seven years.

In addition, people will not necessarily have a poor credit score for the entire period a bankruptcy remains on their records. In four to five years after a bankruptcy, it is possible for someone to achieve a good credit score by adding new credit, like secured cards, to his or her report and keeping any card balances low. It is possible to secure a new credit card after a bankruptcy. Some of the best choices can be secured cards, which are based on an existing security deposit but allow people to build positive credit items.

There are various types of bankruptcies that people can use to get a new start after dealing with seemingly insurmountable debt. By filing for Chapter 13 bankruptcy, people can reorganize their payments and repay a portion of their debts even when making a higher income than individuals who are eligible for Chapter 7 bankruptcy. A bankruptcy lawyer can provide advice and representation when moving forward through the process.

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