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Old vs. new bankruptcy and the impact on credit scores

On Behalf of | May 1, 2019 | Chapter 13 Bankruptcy

The credit scores that can affect many aspects of life for North Carolina residents are based on several factors, including whether an individual has filed for bankruptcy. Some filers may wonder if there’s a difference between old and new bankruptcies when it comes to credit scores. The answer is largely dependent on what a debtor does after bankruptcy has been approved.

After filing for Chapter 13 or a similar type of personal bankruptcy, a credit score may actually improve. This typically happens because less debt is being reported. However, credit scores are also based on factors such as payment consistency, so it’s possible for a debtor to maintain or rebuild their credit if they take the right steps to do so as they move forward after the bankruptcy.

Initially, some filers may get new credit card offers post-bankruptcy since not as much debt is showing up on credit reports. Even so, the approval rate will depend on who the lender is and what someone is specifically applying for. Lenders may also charge higher interest rates or show reluctance to extend or increase credit until they see proof that a debtor is able to better manage their finances. But a lender may be more inclined to extend credit to a debtor who has maintained a good credit history several years after bankruptcy was filed.

The steps a bankruptcy attorney takes will depend on what goals a debtor has. For example, someone looking to get more time to repay their debts might benefit from a Chapter 13 bankruptcy. Legal assistance during this process may be beneficial for several reasons. First of all, creditors are often more willing to negotiate with an attorney. Also, there are important deadlines and documents that need to be properly filed. A lawyer may also review a restructuring plan to ensure that it’s fair.


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