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Michael D. Hart, P.C.
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What happens to a credit score after bankruptcy

Some Virginia residents who are struggling with debt may be considering filing for Chapter 7 bankruptcy. One of the major concerns for many bankruptcy filers is ruining credit scores. However, it is possible to rebuild credit after a bankruptcy.

People should keep in mind that not paying off debts also hurts a credit score. Experts say that the damage to a credit score that is already low is minimal. People with higher credit scores will take a bigger hit. The bankruptcy will remain on the credit report for 10 years, but filers can still demonstrate responsible spending habits that make them attractive to lenders.

First, the person can begin taking out credit cards again, but these should never be maxed out and payments should always be made on time. A good rule of thumb is to keep the amount of money on the credit card under 30 percent of the total allowed. People should also keep an eye on their credit reports. With the three agencies offering a free annual report, people can order a free report every four months. Errors can be reported for removal. Finally, setting aside a little each month in savings for an emergency fund can help prevent further problems with debt in the future.

Legal counsel could help a client review options and decide whether filing for Chapter 7 bankruptcy is the right move. First, the person must qualify. This is usually determined by looking at the person's income. While a Chapter 7 filer may not be able to keep all major assets, some assets are exempt from seizure.

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Michael D. Hart, P.C.
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Roanoke, VA 24011

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