While there are many advantages to filing for bankruptcy when the right circumstances are present, there are certain things filing for bankruptcy won’t do. For instance, while bankruptcy can provide an individual or business with a clean slate to work with after struggling with debt, it won’t erase all debt. In fact, there are certain types of debt such as child support that generally cannot be discharged during the bankruptcy proceedings.
Another thing bankruptcy won’t do is provide an individual with a clean credit report.
A credit report contains information about a person’s “credit activity and current credit situation,” according to the Consumer Financial Protection Bureau. The score that is generated from a credit report is used to help companies decide whether they should loan money or not as it helps determine how trustworthy they are based on their past and current activity. Because companies and lenders rely heavily on a person’s credit report to determine if they should loan money, open a line of credit, or allow an individual to rent or purchase a property, it cannot be wiped clean after bankruptcy.
In fact, after an individual has filed for bankruptcy, it will go on their credit report and remain there for the next seven to 10 years.
Although filing for bankruptcy will affect a person’s credit report, they can work to increase their score by settling certain debt that wasn’t cleared during the bankruptcy proceedings. For example, if an individual owed child support prior to filing for bankruptcy, they likely still owe it. In most cases, an unpaid child support account will show up on their credit report and will continue to report negatively until the debt is satisfied.
What happens after an individual settles an unpaid account?
Once an individual settles an account such as one for unpaid child support, the creditor should update the account to reflect that it has been paid in full, according to Experian. This is usually the case with all other types of accounts. Once an unpaid account is satisfied, the creditor should notify the credit bureaus and their credit report should be updated. Individuals should keep in mind that even after an account has been settled, it will still show up on their credit report but rather than it reporting as “delinquent,” it should show up as “paid in full.”
Now, if an individual is considering filing for bankruptcy and they live in or nearby to Tulsa, OK, they can contact a Tulsa bankruptcy lawyer who can address any questions or concerns they might have. The attorneys at the Henson Law Firm, PLLC can help an individual understand what the bankruptcy process entails and can evaluate their circumstances to determine if they would be a good candidate.
The Henson Law Firm, PLLC is located at:
601 S. Boulder, Suite 600
Tulsa, OK 74119
*We are a debt relief law firm in Tulsa, Oklahoma.
*We help people file for bankruptcy relief under the Bankruptcy Code.