Following bankruptcy the first step is to rebuild credit

Even when there are many ways in which a bankruptcy could be beneficial to someone, many are often slow to make the decision to move ahead with the process. In some cases this may be because they are scared about how going through with the process might impact their credit score.

The truth however is that their credit score is probability already suffering and the best way to address the matter is to file for consumer bankruptcy. The sooner they do so, the sooner they can begin to rebuild their credit. Just how long this will likely take depends on the chapter under which one files.

For those who qualify for Chapter 7 bankruptcy the process will usually take less time. There are two big reasons for this. The first is that because one can only file under this chapter once every eight years, the risk of someone filing again is much lower. In addition, in the course of a Chapter 7 bankruptcy, one’s debt-to-income ratio quickly drops.

Though it may take a bit longer it is also possible to rebuild credit following a Chapter 13 bankruptcy filing as well. Under this chapter, because a debtor is working to pay back debt via a payment plan, it usually takes longer to reduce that debt-to-income ratio. That said, things often begin to look better, following the passage of a year and a half or so.

Establishing good credit is an important thing to do in today’s society. Accordingly, it is not surprising that would be a concern to many. For more in depth answers to this and other questions, a bankruptcy attorney is a good place to start.

Source: Bankrate, “Bankruptcy timeline: Rebuilding credit,” Brigitte Yuille, Accessed June 5, 2014

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