Make sure your credit report reflects the discharge of debts after bankruptcy
For most consumers, the goal of bankruptcy is the discharge of debts and a fresh start. Indeed, the bankruptcy discharge is a powerful rebuilding tool utilized by consumers and businesses alike. In addition, wiping the financial slate clean can actually have a long term positive impact on your credit score.
For starters, your debt to income ratio will be improved. Debt to income ratio is the amount of debt you have relative to your income. As your debt load begins to represent a higher percentage of your overall income, you become less attractive to lenders. It only makes sense. After all, existing large monthly payments can be an obstacle to servicing new debt.
Next, a percentage of your credit score is determined by how much of your available debe you’re utilizing. In other words, if you have access to $500 of credit and carry a $450 balance, your credit score will be hurt as you approach your debt ceiling.
But be careful: the benefits of the bankruptcy discharge can only be realized if they’re reported accurately after your bankruptcy closes. It is important to check your credit report to ensure that discharged debts, such as credit card debts, show a zero balance.
Statistics show that over 70% of consumer credit reports contain errors. Filing bankruptcy won’t do much to improve your credit if the discharge of debts is not accurately reflected on your credit report. You can be sure that the bankruptcy filing itself will appear, so make sure you also receive the positives of bankruptcy as well. Credit card accounts that were included in your bankruptcy should be reported with a zero balance. Anything short of that needs to be addressed with the credit reporting agencies as well as the creditor. If necessary, get your bankruptcy attorney involved.
Unfortunately, sometimes it’s necessary to fight for your fresh start.