Richard J. Shurtz, Attorney at Law

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Bankruptcy: Credit score improves with time and regular payments

Washington state follows the same rules regarding credit scores that are applied nationwide. Generally, a bankruptcy filing will be a great relief in terms of the debt load that has been taken off the consumer's back. It is also expected, however, that there will be problems with one's credit score post-bankruptcy.

Getting one's credit record back up to respectable levels is a common challenge that is expected in return for the elimination of unsecured debt and, in some cases, the stabilization of secured debts such as a car loan or a mortgage. Remember that in most cases the bankruptcy filer had a horrendous credit record prior to filing bankruptcy. The existence of a large amount of delinquent medical bills and/or credit card debt created a rock-bottom credit score. The entry of judgments, lawsuits and foreclosures will of course exacerbate the situation.

So in general the decrease in credit scores is not caused by the filing of bankruptcy. Indeed, one's credit score will generally see a spike upwards right after the proceeding is filed. When starting out to repair the credit score, go easy on new credit applications. Research first and obtain one or two accounts that are prearranged. Don't go shopping on the open market because each hard credit inquiry for a credit card will take points off the score.

Late payments can legally stay on your record for seven years from the last of activity. Scrupulously avoid late payments when trying to rebuild one's score. A collection account stays on the report for roughly the same time as a late payment. Paying the old account off as soon as possible will only help to improve the situation.

The strongest way to get the report and score back to a point of strength is to have accounts that are being paid on time each and every month without fail. In Washington state, a Chapter 7 bankruptcy stays on the record for up to 10 years and a Chapter 13 for seven years. However, the importance of the negative impact of these items will lessen after a few years.

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