Should You Clean Up Your Credit Report After Bankruptcy?

Should you remove bankruptcy from your credit report? When people go through bankruptcy, it can be difficult to move forward when most of your creditors cannot give you any more credit. 

However, part of taking bankruptcy is that it stays on your credit report for a certain amount of time after filing. As time goes on, many people wonder if they should be taking bankruptcy off their credit reports. Continue reading; the answer might surprise you.

What is bankruptcy?

What You Need to Remember About Bankruptcy

When you cannot repay obligations on time, desire to end creditor harassment and wish to avoid foreclosure, it may be time to seek legal assistance and file for bankruptcy.

Bankruptcy is a legal procedure that allows the debtor - whether an individual or corporation - to return a part, if not all, of their obligations in exchange for a fresh start. Additionally, businesses utilize it to liquidate their assets and distribute them fairly if they decide to close their doors. However, this article defines bankruptcy as a legal proceeding used to restructure debts through liquidation or a new payment arrangement.

Before proceeding, keep in mind that filing bankruptcy does not guarantee that all of your obligations will discharge. Certain forms of debt will remain unpaid even after your bankruptcy case is discharged.

What Types of Bankruptcies Are There?

While the primary objective of bankruptcy is to eliminate debt, not all bankruptcies are equal. Indeed, there are six distinct categories of bankruptcies:

1. A Chapter 7: Insolvency or Liquidation
2. Bankruptcy Chapter 13: Plan of Repayment
3. A Chapter 11: A Comprehensive Reorganization
4. Bankruptcy Chapter 12: Farmer Families
5. Chapter 15: Applied in International Cases
6. Chapter 9: Municipalities

You may have given it a simple look at this list and then shut out for a second. That is acceptable. Almost certainly, you would be dealing with the two most typical kinds of personal bankruptcies: Chapter 7 and Chapter 13.

Bankruptcy Benefits

• Bankruptcy can erase past tax debts.
• During the procedure, the automatic stay will kick in. The bankruptcy court suspends debt collection during the bankruptcy proceeding under the US Bankruptcy Code. The automatic stay stops foreclosures, wage garnishments, and repossessions (which is common for car loans). Most importantly, quit bothering lenders or collection agencies.
• Discharged debts or money owing to creditors.
• Personal property is safeguard under bankruptcy exemptions.
• A new beginning and an opportunity to restore your credit.

(Feasible) Bankruptcy Drawbacks

Bankruptcy isn't necessarily a bed of roses. Before making a decision, consider the following drawbacks:

• Credit card loss. Credit card issuers automatically deactivate your cards during or even before you file for bankruptcy.
• Impact on credit report - bankruptcy stays on your credit record for 7-10 years, increasing insurance rates and making credit card applications harder.
• Non-exemption property loss - Non-exempt property is seize by the bankruptcy trustee and sold to pay your creditors.
• Tax refunds were denied due to insolvency.
• Not all debts can be erased when you file for bankruptcy, including alimony, student loan bills, and any unforgiven debts.

What If I file Bankruptcy?

Bankruptcies under Chapter 7 and Chapter 13 appear on your credit report. The type of bankruptcy file determines how long it is public. Bankruptcy Chapter 7 remains on your credit record for ten years from the date of filing. A completed bankruptcy chapter 13 remains on your credit record for seven years from the date of filing, or ten years if the case is not discharged.

As a result, declaring bankruptcy lowers your credit score immediately. The extent to which your credit ratio will decline is determined by how high or low it was before bankruptcy. In general, a loss of between 100 and 200 points is reasonable.

The good news is that you may immediately begin restoring your credit after your bankruptcy is discharged. Within 1–2 years of filing, it is feasible to improve one's credit score. The majority of bankruptcy filings already have poor credit ratings as a result of missed payments. The majority of unsecured obligations are eliminated when the court grants a discharge. Credit ratings rise as a result of no longer missing payments and dismissed accounts showing a balance of zero.

The Importance Of Removing Bankruptcy From Your Credit Report

It is important to remove bankruptcy from your credit report as soon as possible because this allows you to restore your credit score much faster. If you do not remove bankruptcy from your credit report, you will have a harder time rebuilding your credit score.

You don't want to wait until your current or future creditors ask you about your credit history. You also don't want them to see that you've filed for bankruptcy without seeing an improvement in your credit score beforehand.

But if you've already filed for bankruptcy, there's no need to worry as long as you take the proper steps now and improve your score in a timely manner. Improving your credit score is going to take some time and effort on your part, but it's worth it in the end.

Related Topics: How To Get Defaults Remove From Your Credit Report?

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Is There A Fee?

Bankruptcy is extremely costly. The majority of folks wind up spending tens of thousands of dollars in fees in order to get their bankruptcy removed from their credit report. By the time that the bankruptcy has been removed from their reports, they are so far in debt that there is no way for them to recover.

The cost of hiring a company to do this for you is obviously less than the cost of having done it incorrectly yourself. The cost will vary depending on what company you choose and what state you live in, but an average cost could be around $500-$1500. You will also need to pay any court costs and filing fees if they are required by law.

How Do I Get The Bankruptcy Removed?

There are several strategies to repair your credit score following bankruptcy. These include the following:

• Avoid repeating the errors that resulted in your bankruptcy. Maintain a budget and make an effort to accumulate money for an emergency fund.

• While you do not want to instantly incur more debt, you will want to demonstrate your responsibility strategically.
• Ensure that you pay all of your payments on schedule. Rent and utility payments can be included on your credit report with the permission of your landlord or utility company.

• Secure a loan. Local banks and credit unions are prepared to lend money secured by a savings account deposit due to the minimal risk involved. If you make on-time loan payments, your gain is substantial. Banks and credit unions can assist you in improving your FICO score by reporting your regular payments to the credit bureaus.

• Take out a secured credit card, which is backed by an upfront deposit. A secured card's credit limit is typically equal to the amount of the deposit paid. While these cards may have yearly fees and high-interest rates, they may be used to build credit and qualify for a better, unsecured card. Ascertain that they record your on-time payments to credit agencies. Naturally, never charge more than you can pay off before the end of the month.

  As your credit score improves, you may be eligible for a vehicle loan or a mortgage.

• Verify that the bankruptcy was deleted from your credit record on the date specified. Additionally, when evaluating your credit report, you should contest any mistakes you see. Each point is significant. Each of the three credit reporting firms offers a free credit report once a year, Experian, Equifax, and Illion.

Can I remove It Myself, Or Must I Work With A Lawyer?

The first thing you must-do if you are serious about removing bankruptcy on your credit report is to hire an expert credit repair lawyer who has the expertise and the experience in dealing with all matters related to credit files.

Instead of attempting to handle all of this yourself, it would be much better for you to engage the service of an attorney who specializes in these matters. This way, you will be able to take advantage of their skills and knowledge and have a much better chance at getting your bankruptcy removed from your record.

You will also have the added benefit of obtaining peace of mind knowing that someone else is taking care of your case and that they will get the job done properly and on time.

Once you hire a good attorney, he or she will be able to help you remove bankruptcy on your credit file as well as work towards raising your score as high as possible so that you can start improving your finances once again.

Things To Consider Before You Make The Decision To Remove It Yourself.

There are many aspects that will determine whether or not you should remove bankruptcy from your credit report yourself. 

These include your:

• likelihood of success, 
• the cost of services, 
• and the consequences of failing to successfully remove it. 

Before you make the decision to remove bankruptcy from your credit report yourself, you should consider all the pros and cons carefully.

• You should know that it is possible for you to remove bankruptcy from your credit report yourself. The process is not always easy, which is why there are companies that specialize in this process. If you choose to remove bankruptcy from your credit report yourself, knowing all of the costs involved beforehand can help you make a more informed decision.

• When deciding whether or not to remove bankruptcy from your credit report yourself, you should consider how long the procedure will take. It may be challenging for most people to complete this process without help because it requires detail-oriented work and knowledge.

This is not a do it yourself project. You will be working with professionals who know how to handle your situation and make the best of it. If you try to fix your own credit, you could end up making mistakes that will make your credit worse instead of better.

In my experience, the best company that exists when it comes to repairing credit reports is Australian Credit Lawyers. They have rescued thousands of people and improved their credit. I am sure they can help you too!

Conclusion Paragraph

The process can be a bit of a headache, but it’s a lot easier than you think. Overall, the most important conclusion is this: talk to your lawyer. It isn’t necessarily bad to have a bankruptcy on your credit report, but you will want to make sure that what you’ve done is best for you. 

Bankruptcies affect your credit report, and it can be years before you are free of them. In fact, bankruptcy is recorded on your credit report for up to 10 years from the date that you filed for bankruptcy. 

This means that if you have an existing financial problem, it would be beneficial for you to place your pre-emptive steps in place. Do not attempt to take over on your own; contact Australian Credit Lawyers immediately.