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. . . IN A WORD, YES.


In a recent study if was found that on average, an individual’s credit score actually rises 72 points within one year after a bankruptcy. (CIN Legal Data Services. June 2008) There is nothing in the law that either prevents a creditor from extending credit to an individual who has filed bankruptcy nor is there anything that requires them to do so. By federal law, a bankruptcy can remain on your credit report for up to 10 years.

As seen in the news recently, you will find in general that the credit markets have tightened for everyone. Historically, however, it has actually been a positive to file bankruptcy for many who have had credit problems. This is because some creditors feel that you now have the ability to pay them since your debt was discharged and you cannot file bankruptcy again for up to 8 years in most cases. If you are employed or have a steady source of income after bankruptcy, many people find that they receive preapproved credit cards in the mail after they receive their discharge. A recent study found that credit card companies like to extend new credit cards to people who have filed bankruptcy because there research has found that people with a bankruptcy in their past pay the minimum payments on their credit cards every month rather than paying down more of the balance. This is how the credit card companies make huge amounts of money. This is not to say that you should pay just the minimum monthly payment on your credit cards when you do have them but is being used to illustrate how credit card companies will solicit you after a bankruptcy.

If you wish to purchase or refinance a home after a bankruptcy, you’ll find that the mortgage lenders require only that you have good credit for a period of two years after bankruptcy filing to get a low conventional rate of interest. You’ll find that some mortgage companies will even grant mortgages to people who have filed for bankruptcy even before two years have passed. While you may have to pay a higher percentage rate at the outset, oftentimes people take out these mortgages and when their credit improves, they refinance to a lower rate.


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Dina C.  Warren, R.I. Dina C. Warren, R.I.
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