After Your Bankruptcy Is Discharged
Once you are discharged from bankruptcy, your credit rating will be R9. An R9 rating is the lowest credit rating you can have. You will have this rating for 6 years if it was your first bankruptcy and for 14 years if it is your second bankruptcy.
An R9 credit rating can make it hard to get a mortgage or a credit card. For example, instead of a credit card, banks might give you prepaid cards or cards that require you to collateral. It might also be hard to get other types of loans, or even good interest rates on loans.
If it is your first bankruptcy, you must wait 6 or 7 years for the information about your bankruptcy to be removed from your credit report. Both your credit rating and credit score will also be erased. Your credit report will look like you never had any credit before.
You will have to start building your credit again. You can do this by opening a bank account and getting a credit card. It is important to use your credit carefully so you do not get in debt again.
Things To Do After You Get A Bankruptcy Discharge
Submitted by Rachel R on Wed, 12/10/2014 – 3:21pm
Six Things to Do After Bankruptcy Discharge
Image source: Flickr user Steve Snodgrass
If you were deep in debt and decided to pursue a bankruptcy, if all goes well, you’ll end up with a bankruptcy discharge. With a Chapter 7, it takes about four months to get your discharge and with a Chapter 13, it will come at the end of your three to five year repayment plan. Once you have your discharge in hand, it’s time to start rebuilding your credit and making the most of your fresh start. Today we’ll take a look at six things you should do after you get your discharge to get and stay on the path to a brighter financial future.
#1 Keep a Copy of Your Bankruptcy Petition and Discharge
Once you get your bankruptcy discharge notification, be sure to keep it somewhere handy. Also, be sure to have a copy of your petition that your attorney filed along with all of the supporting schedules. This can be important if any debt collectors try to collect on debts that were discharged during bankruptcy or if items on your credit report aren’t showing up properly. Keep all this paperwork on hand indefinitely.
#2 Get a Copy of Your Credit Report
#3 Start Rebuilding Your Credit
#4 Make Arrangements on Other Remaining Debts
#5 Build Up an Emergency Fund
#6 Focus on the Future
Ask To Become An Authorized User
Getting someone to co-sign on a loan may be a tall order, but building your credit as an authorized user on someone elses credit card is often more feasible. Being an authorized user involves having a card in your name thats attached to another borrowers account, not your own. Youll be able to use the card for purchases without having to qualify for the account on your own meritsbut you wont be able to modify the account.
Credit card payments will show up on your credit report, so if these payments are made on time and the credit utilization rate stays low, your score will improve over time. Just make sure the credit card company reports authorized user payments to the three main credit bureaus so you have the greatest chance of increasing your score. While this isnt as impactful as other methods of increasing a credit score, it can still be helpful as part of a larger strategy.
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Types Of Bankruptcy Discharges
Individual debtors can file for Chapter 7 or Chapter 13 bankruptcy protection. The trustee will liquidate your nonexempt assets and divide the proceeds among your creditors in a Chapter 7 bankruptcy. Any debt that remains will be discharged or erased.
You’ll enter into a payment plan over three to five years that repays all or most of your debts if you file for Chapter 13 protection. Any debt that remains at the end of your repayment plan will be discharged.
A Chapter 13 bankruptcy allows some debts to be discharged that can’t be discharged in Chapter 7 proceedings. This includes marital debts created in a divorce agreement, although not spousal support or alimony, as well as court fees, certain tax-related debts, condo and homeowners’ association fees, debts for retirement loans, and debts that couldn’t be discharged in a previous bankruptcy.
Regularly Monitor Your Credit Reports
The idea of looking at your credit report after filing bankruptcy can be intimidating or anxiety inducing. Still, you will want to make a regular habit of doing so for a variety of reasons. Its important to monitor reports diligently and consistently to ensure all information remaining on your profile is accurate. Incorrect information can cause your score to be lower than it should be.
If the discharged debt isnt showing up accurately on credit reports, it could count against you as a form of outstanding debt, says Tayne.
Making matters worse, the debt could erroneously be transferred to a new debt collection agency which could be a challenge to resolve.
It is very easy to monitor your credit reports for free online. You can download a free copy of your report from each credit bureau once per year. You can also take advantage of free credit monitoring online tools such as Bankrate or set up fraud alerts through your banks.
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How To Rebuild Credit After Bankruptcy
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A bankruptcy gives you the relief of a clean financial slate but also the worry that youll never have decent credit again.
Although a bankruptcy stays on your credit reports for up to 10 years, its impact on your score will fade with time. In fact, your credit score after bankruptcy may not be as bad as you think. You may actually have a higher credit score a year after bankruptcy than before filing because you stop fighting an impossible battle and begin rebuilding.
If you were eligible to file for bankruptcy, whether it was;Chapter 7 bankruptcy, the most common kind, or Chapter 13 bankruptcy, your credit may have already been in tatters. But you can begin to restore your credit right away by offsetting the negative information on your credit report with something more positive.
Your Credit Score Takes A Hit
Your credit score takes a major hit following a Chapter 13 discharge. Odds are if youre in bankruptcy, your credit score isnt great anyway, but its not uncommon for a credit score to drop as much as 200 points.
It also shows on your credit report that you have a bankruptcy, and it remains there for 10 years. This is a negative strike and can make it difficult to get a standard loan from a bank, but your debts are also at zero.
Credit card companies keep track of bankruptcies and often send people who have poor credit offers for credit cards designed for them. These cards have a low balance and very high-interest rates. Once your debt is zeroed out, its an opportunity to rebuild your credit, but take it slowly.
The last thing you want is to incur debt again and end up in the same boat as you were before. There is nothing you can do about the credit score hit, but you can choose what debt you want to incur.
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Your Credit After Bankruptcy
How will a discharged debt appear on my credit report? Debts wiped out in bankruptcy should be marked as discharged or included in the bankruptcy. Charged off does not mean discharged, and it does not mean the debt is not legally enforceable. You are entitled under federal law to an accurate credit report; therefore, it is in your best interest to ensure that all your dischargeable debts are properly categorized as discharged on your credit report. Additionally, under federal law, creditors are required to report that the account balance on a discharged debt is $0.00. So dont forget to check your credit report and dispute any debt that is not properly notated.
How do I check my credit report for free? Just visit www.annualcreditreport.com and answer the security questions. You can get a free report once a year from each of the three credit reporting agencies.
How long is a bankruptcy reported on my credit history? Your Chapter 7 bankruptcy will be reported for 10 years from the date of filing your case. There is a common misconception that the Chapter 13 bankruptcy wont fall off until 7 years after your payment plan ends. This is simply not true. The credit reporting agencies will report a Chapter 13 bankruptcy for 7 years from the date the case was filed. Remember that in each of these cases, the date is calculated from the date of filing not the date your receive a discharge.
Start To Rebuild Your Credit
During bankruptcy its important to start to build up what got torn down. To rebuild your credit you may need to obtain a credit card. Using it wisely will demonstrate to lenders that you can manage your money and are determined to slowly rebuild your flawed credit history.
If you find yourself racking up debt again, you should stop using your card immediately and start a repayment plan. If necessary, use a debit card or prepaid credit card until you can pay off your regular card. Keep in mind that the interest rate on any card for which you are eligible will likely be higher than on the average credit card.
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One: Make Arrangements To Pay Any Nondischargeable Debts
If you have non-dischargeable debts, such as student loans or certain taxes, you will need to contact the creditor to make arrangements to pay them. If you do not arrange to pay these debts, the creditors can begin collection action and report delinquencies on your credit report.
Nondischargeable student loans. As to student loans, you should receive a forbearance for the time you were in Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, the loans would have been paid the same as other unsecured creditors but would also continue to accumulate interest. In either case, you need to make arrangements to get these loans back on track after bankruptcy.
Fortunately, there are various programs to lessen the burden of federal student loan payments worth exploring to see whether you might qualify, including income-based repayment and . Some private lenders have hardship programs of some kind. In any case, try to avoid deferments, as the accumulating interest may cause the debt to build to an unsustainable level.
Nondischargeable taxes. Regarding non-dischargeable income taxes, contact the IRS, state revenue department , or the local taxing authority to make payment arrangements. However, if you have a substantial tax debt, you may need the assistance of an attorney to work out a settlement. If you can pay off these tax debts in a lump sum at some point, you will likely save substantial interest and fees.
The Trustee May Sell Some Of Your Property
If you filed Chapter 7, the trustee may liquidate some of your non-exempt assets and distribute them to creditors according to the priorities stated in the bankruptcy laws. You will get to keep many of your assets like some household items, your car, and items of clothing. You can learn more about this on our page about bankruptcy exemptions.
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Debt Collection After A Bankruptcy Discharge
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In a Nutshell
A bankruptcy discharge order permanently forbids creditors to try to collect discharged debt. Not all collection phone calls are illegal, and some types of debt can be collected after bankruptcy. Weâll help you recognize the difference and learn how to stop debt collectors that violate a bankruptcy court order.
A bankruptcy discharge order permanently forbids creditors to try to collect discharged debt. Some creditors and collection agencies try to collect debt despite a bankruptcy court order telling them to stop. Phone calls and letters for discharged debt are illegal collection practices. Not all collection phone calls are illegal, and some types of debt can be collected after bankruptcy. Weâll help you recognize the difference and learn how to stop debt collectors that violate a bankruptcy court order.
Records Against Property You Own
To remove the record of your bankruptcy from the Land Charges Register you must do both these things:
- fill in Land Charges form K11 on GOV.UK – theres a £1 charge for each entry you want to cancel
Bankruptcy entries are automatically removed from the Land Charges register after 5 years if theyre not renewed. Find out more about what happens when bankruptcy ends on GOV.UK.
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What Is A Bankruptcy Discharge Order
An order of discharge in bankruptcy officially ends your personal liability on certain debt and orders a permanent stop to collection actions. In a Chapter 7 bankruptcy, the order is usually granted 60 – 90 days after the Meeting of Creditors. In a Chapter 13 bankruptcy filing, the order of discharge is granted after the repayment plan is complete. The repayment plan usually takes three to five years.
Best Bankruptcy Auto Loans
Nov 8, 2019 How Long Do I Have to Wait to Buy a Car After Chapter 7? You can apply for an auto loan as soon as your bankruptcy discharges. While some;
If youve recently completed a bankruptcy, you might be wondering if you can buy a car. In most cases, the answer is yes. If the debts youve discharged in;
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An Automatic Stay Will Stop Debt Collection
Filing for bankruptcy will trigger the automatic stay. The automatic stay will ensure that creditors will not try to collect from you while your case is pending. What this means is they can’t contact you to collect on debts like credit card debts and other types of unsecured debts. The automatic stay will also stop the garnishment of your wages.
Avoid Repeating Past Mistakesand Making New Ones
You can make your bankruptcy a learning experience by reviewing your past missteps and taking care not to repeat them. Re-examine your old patterns of spending, borrowing and repayment to better understand exactly what led you to bankruptcy, and take steps to ensure you won’t go down those paths again.
Consider working with a certified credit counselor to devise a realistic budget, set achievable money management goals, and establish a long-term plan for rebuilding your credit.
Beware that promise to help re-establish your credit in short order, or clean up your credit report quickly. There are no quick fixes for bankruptcy. Rebuilding your credit after you’ve filed for bankruptcy takes time and patience. Millions have done it, and you can too.
Why A Case Isn’t Over After A Bankruptcy Discharge
Most people file for bankruptcy for the debt discharge. It’s the last court action that directly affects many filers, so, understandably, they think the case is over once it’s received. It’s also confusing that, in many instances, the court will close the case soon after the entry of discharge. But the discharge order and case closure are different.
The bankruptcy discharge releases the debtor from liability for certain debts, so the debtor is no longer legally required to pay the balance. The discharge also prohibits creditors from collecting discharged debts in any manner, including through lawsuits, demand letters, and telephone calls.
In some cases, the bankruptcy will continue for some time after the discharge order is issued. In fact, for creditors, the trustee, and the court, the case could be just getting underway.
Asset Chapter 7 Cases Take Longer
If the case involves assets the trustee needs to sell, the case could go on for months or years after the discharge. The amount of time will depend on whether the Chapter 7 trustee needs to file lawsuits against creditors or others or sell assets like real estate, vehicles, or businesses.
Once the trustee has a pool of funds, the court will ask the for what the debtor owes. The trustee will file objections with the court to any claim that is deficient or improper, and the court will hold hearings on them. The trustee mails checks to those creditors with allowed claims and will file a report after distributing funds. Only then will the court close the case.
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There Is Life After Bankruptcy
If you follow these steps, and take care to avoid repeating past missteps, you’ll find that your credit scores will begin improving within a few years after your bankruptcy filing. And by the time the bankruptcy “falls off” your credit report after seven or 10 years , you may find yourself eligible for a wide range of credit, at reasonable rates.