How To Repair Your Credit: Step One – Resolve Your Debt Burdens
If you are worried about repairing your credit while your debt load continues to stand in your way, the first step is to resolve that debt. Until you resolve your debt, your debt-to-income ratio may be too high to allow for credit repair to be a real option.
For many people, the most direct and advantageous method of taking care of burdensome debt is through bankruptcy. Having a bankruptcy on your record may be much less damaging than defaulting on loans or retaining a high debt-to-income ratio.
Chapter 13 debt reorganization will allow you to consolidate your debt into one monthly payment and repay at a a rate you can afford. Once you complete your Chapter 13 bankruptcy repayment schedule or obtain a debt discharge through Chapter 7 bankruptcy, the next order of business is to restore a healthy credit rating.
Reducing your debt-to-income ratio is critical. Using credit responsibly once again is also important — even if that means starting over with a secured credit card. Once your debt load is reduced or gone, and you keep it down through prompt monthly payments after using credit again, you can be on your way to a strong credit rating again.
Immediate Debt Relief And Stress Relief For The Honest But Unfortunate Debtor
Has your debt gotten out of control – and your credit rating taken a hit – after flooding triggered by a hurricane, a divorce or job loss? Richard Banks & Associates, P.C., has been guiding burdened debtors to debt relief and credit repair since 1974. We recognize that you no doubt believe in financial responsibility and want to make a good faith effort to repay the debt that is harming your credit rating. We will never urge you to file bankruptcy unless we determine, after reviewing your financial big picture in detail, that it is the right solution in your case.
Also see our bankruptcy FAQ and our bankruptcy practice center.
Common Myths About How The Bankruptcy Process Affects Credit
Many people in Tennessee who consider filing consumer bankruptcy have concerns about the impact this legal process will have on their lifestyle, finances and credit score. While filers are warranted in their concerns, there are many myths out there surrounding how the bankruptcy process actually affects a filer’s credit profile.
Myth #1 — Bankruptcy information stays on a credit report for 10 years
Many people believe that their bankruptcy will remain on their credit report for a full decade without exception. While Chapter 7 bankruptcy does remain on public record for 10 years, any other references of the bankruptcy only last for seven years. These references can include Chapter 13 public record items, third-party collection debts and tax liens and certain trade lines.
Myth #2 — Poor credit is inevitable after bankruptcy
Many people also believe that after they file for bankruptcy, they will have a poor credit score as long as the filing remains on their credit profile. Even though filing bankruptcy does lower a person’s credit score dramatically, filers can still boost their score shortly after by practicing smart credit management. Some filers may even have scores in the “good” credit score range within four or five years.
Myth #3 — Bankruptcy affects everyone’s credit equally
Everyone who files bankruptcy has a different amount of debt and different types of debt. A filer’s credit score and the amount of debt discharged does have an impact on credit score after filing, but those who only discharge a few accounts with a relatively low amount of debt may find that their credit score is higher than someone who discharged more accounts and had a higher total amount of debt.
Myth #4 — All bankruptcy debts get eliminated from a credit report
Some people believe that when they file bankruptcy, all of their debts will be completely removed from their credit report. However, bankruptcy is designed to eliminate the need to repay debts to creditors, so delinquent accounts may not be removed from a filer’s credit profile. These accounts can affect a person’s credit score for up to a decade, but their impact will become less and less as time passes.
Contact A Tennessee Debt Relief Lawyer for a Free Initial Consultation
Call us at 423-219-3299 or send us an email to talk to an experienced Cleveland attorney about how to fix your credit after bankruptcy or after debts have become unmanageable.