Your Credit Score During Bankruptcy
Most people who are in the process of filing bankruptcy are understandably concerned with their credit scores. There are a few things to know about your credit score when you are filing bankruptcy. During the few months it takes for a Chapter 7 bankruptcy case, or the up to 5 years for a Chapter 13 case, creditors are not required to make any reports on your credit. Even while making payments under a Chapter 13 bankruptcy, most creditors will not report your payment activity. This is out of fear that they will be violating the automatic stay that was put into effect when you filed for bankruptcy.
An automatic stay stops creditors from trying to collect any debt from you. It prohibits creditors from calling you, sending letters, garnishing your wages, or any other form of debt collection. Therefore, with the automatic stay in place, creditors will not be reporting any positive payment histories. Another reason for their failure to report your payments is the possibility that you may not complete your bankruptcy requirements. If the bankruptcy requirements aren’t met, the debt will once again be fair game for the creditors. Most creditors prefer to wait until the debts are paid in full, or discharged completely.
If you are filing for Chapter 7 bankruptcy, you will be unable to accumulate more debt before and during the bankruptcy process. If you are filing a Chapter 13 bankruptcy, the only new debt you can accrue would be in the form of a refinanced mortgage, so until your bankruptcy is discharged your credit report will sit.
After you have received your discharge, it is important to take a good look at your credit report to ensure that all of your debts have been eliminated. Credit agencies often make errors, and those errors will affect your credit in a negative way. In addition, if creditors fail to report your discharge, they may be in breach of The Fair Credit Reporting Act. Under the FCRA, all United States residents are entitled to one free copy of their credit report every 12 months from each of the three major credit bureaus: Equifax, Experian, and Transunion. If there are errors in your credit report post bankruptcy, you can send a copy of your bankruptcy discharge papers to the creditor and/or collection agency along with a note explaining the error, or notify your bankruptcy attorney, and allow them to handle it.
Your Bankruptcy Attorney
If you are facing bankruptcy, or if you are unsure if you qualify for bankruptcy, contact us at (888) 728 0044 or email us here. We offer free consultations to prospective bankruptcy clients. We look forward to working with you.
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