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How to repair credit properly after a bankruptcy

Filing for bankruptcy could be an effective way to help a Texas resident get control over their finances. However, it can also have an impact on a person's credit score. While it is possible to repair a credit score, the only way to do so is by spending time making payments and taking other steps to overcome past mistakes.

Those who choose to work with a credit repair company may be told about something called file segregation. It involves creating a brand new identity. This strategy is purported to make it easier to rebuild credit instantly. However, the truth is that it could result in prison time. This is because taking steps such as signing up for an employer identification number (EIN) is considered to be fraud if an individual isn't planning on starting a business.

Typically, debt repair companies will tell a person to use an EIN to obtain credit instead of their current social security number. They will attempt to scare people into thinking that they can't get credit for up to 10 years using their current identity. Generally speaking, individuals will qualify for secured credit cards or other bad credit loans after a bankruptcy. While they may have higher interest rates, it can allow them to improve their credit scores in a legitimate manner.

By filing for bankruptcy, it may be possible to have debt balances discharged without losing property. In some cases, balances could be discharged without paying anything to creditors. It may also put an end to the threat of a creditor lawsuit, repossession or other collection activity. An attorney could help a client through the bankruptcy process.

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