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How Does Bankruptcy Discharge Affect Your Credit?

Bankruptcy impact on credit

While debt trouble is the prime motivation for declaring bankruptcy, debt relief is not the same thing as obtaining a clean slate for your credit rating. The fresh start afforded by bankruptcy unfortunately can come with the stigma of having once been a poor lending risk.

Record of a bankruptcy will stay on your credit report for a lengthy period of time — seven years for a Chapter 13 and 10 years for a Chapter 7 — before it is automatically removed. These time periods run from the date of filing, so it is likely that they will be visible on your report well after the bankruptcy discharge occurs. Debt discharge is typically granted several years after filing but within the time frame that the bankruptcy is still visible on a credit report. For example, your Chapter 13 repayment plan may be completed within four years but the bankruptcy may stay on your record for three more years.

Your credit score is calculated based on several factors, including your record of past payments, the amounts of money you owe to creditors and your balance of positive and negative accounts. Even when you no longer owe money on an account, previous debts and missed payments will impact your credit score as long as they remain on the credit report.

Your credit score will likely plummet due to the bankruptcy, but fortunately there are ways you can rebuild your reputation, such as establishing new credit accounts, making timely payments and keeping low account balances. One popular method is establishing secured credit card accounts, which are based on upfront deposits of cash. Obtaining loans secured by bank deposits is another way to restore creditworthiness, as is keeping up payments on debts not discharged — such as student loans.

If you have questions about how filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy in Georgia could affect your credit score, it may be time to speak with one of our focused debt relief attorneys. To schedule a free initial consultation with a professional from Jeff Field & Associates in Scottdale, Georgia, call 404-381-1278 or contact us online. We advise and represent individuals throughout Dekalb County and Fulton County, with satellite offices in Marietta, Athens, Lawrenceville, Douglasville and Gainesville.

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