Many people wonder how filing bankruptcy will affect their credit. The truth is that there is not a clear answer to this question. Most people who file bankruptcy are already behind on their bills and often have bad credit as a result. In these circumstances, it is hard to say if filing bankruptcy will make things worse.
The fact that a person has filed bankruptcy can appear on his or her credit report for a period of 10 years after the date the case was filed. However, this doesn’t mean that a person who files for bankruptcy will be unable to obtain credit for 10 years! Because bankruptcy wipes out all of a person’s old debts, he or she may actually be in a better position to pay new lenders after the bankruptcy. As a result, some lenders are willing to extend credit to a person who has filed a bankruptcy soon after the case is discharged. However, the interest rates and fees may be high, so a person who has filed bankruptcy should be careful not to take on debt he or she can’t pay.
After filing bankruptcy, debts discharged in the bankruptcy should be listed as having a zero balance on the filer’s credit report. Debts that are incorrectly reported as having a balance will negatively affect a person’s credit so it is important to check your credit report after filing bankruptcy. Any errors should be reported to the credit reporting agency.