Credit repair is not an option to bankruptcy, but credit repair can make a big difference after a bankruptcy has been discharged. If you are behind on your bills, unable to make your payments and going deeper every day, bankruptcy may be the right choice for you. Once you start the process collectors will stop hounding you, and when it is done you will probably not owe anyone a cent. There is no stigma to speak of, and recovery, with a bit of credit repair, is quick.
Is bankruptcy the right decision for you, or even possible? The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 changed the rules to make qualification tougher, but if you meet the income requirements, you’re in. If you don’t, you have to go through a Disposable Monthly income (DMI) calculation, either way we advise folks to speak with a bankruptcy attorney before doing anything.
Next Stop – Credit Repair
In our opinion, it should be a business decision. Check the numbers look at your options, and then do what is called for. We hate to see someone throwing good money after bad when there is no hope of catching up. If you decide on bankruptcy, the next step is credit repair.
Fresh Start Time
Credit repair is not about removing the bankruptcy from the public records section of your credit report. You will need to live with that for a while. Credit repair is about pushing the credit bureaus to clean up your report. Once an account is discharged the previous status is nullified and the account cannot report in collection or with a delinquent balance.
Clean Up Will Not Happen By Itself
Unless you initiate the credit repair process yourself it will not happen. Many bankruptcy attorneys will send appropriate documentation to the credit bureaus and start the ball rolling, but it is rare that the credit bureaus will comply all at once. It is pretty normal for the full credit repair clean up to take a few requests.
Rebuild Credit ASAP
In addition to the credit repair clean up it is critical for you to rebuild your credit ASAP. The FICO scoring model puts a lot of positive weight new accounts opened after a period of bad credit. As soon as your budget allows you should open a couple of small secured credit cards. If you come to us for your clean up (and you should), we will guide you through the process of getting your new credit cards open and managing them for score optimization.
The Big Bounce!
You can expect your credit scores to fall as the result of a bankruptcy. The full extent depends largely on how bad things got before the discharge. Recovery is another story and can be really dramatic. Between the credit report repair and new credit building and management, there is no reason that your score cannot hit 700 within a year of the discharge.