The impact of a bankruptcy on a person's credit score depends on a number of different factors. There are cases where a Virginia resident who is struggling to pay debts actually sees an improvement in his or her credit score after filing for bankruptcy. Credit scores are calculated by looking at credit history and other data points. When the discharge process is completed, the lower amount of outstanding debt reported may result in an increased credit score. After that, the filers will need to take steps to begin the process of rebuilding credit.
A number of credit card companies are willing to offer cards to people who have just completed bankruptcy because they like that there is little debt. The reason for the loan and the type of lender will dictate whether or not early credit applications are approved. It is common for lenders to charge higher interest rates immediately following a bankruptcy and some lenders will not give out loans until the person has an improved credit score or has demonstrated an ability to responsibly handle debts.
According to some observers, it may be possible to have perfect credit again within two years after filing bankruptcy. Chapter 7 filings remain on a person's credit report for 10 years. Chapter 13 filings remain on a person's credit report for seven years.
Consumers who are struggling to pay debts or who are worried about foreclosure or repossession might want to speak with an attorney. An attorney may be able to provide advice about the different options the client has to consolidate or eliminate debts. An attorney might guide the client through the Chapter 7 or Chapter 13 bankruptcy process or help the client complete the steps to reestablish credit after a discharge.