Does Bankruptcy help establish new credit?

As with debt rates in America, many are held in one form of it or the other. Mortgage repayment issue is one of those in the front burner. Getting a debt relief is no doubt an option many seek out of this problem. The most obvious method of getting out for many US dwellers is the bankruptcy approach.

As for whether filing a bankruptcy will help you out with new credits is what you’ll get to find out with loan modification companies who are experts and experienced managers in this area. Note that getting a loan modification lawyer to help with interpretation would help here.

Bankruptcy filing changes in 2005

Bankruptcy as a last resort in most cases has been viewed as a means of getting out of debt and often time, abuse of the system was common. In 2005, the American government made some clear changes of the laws guiding the process with the enactment of the Bankruptcy Abuse Prevention and Consumer protection act (BAPCPA). These changes brought about some limitations and requirements for bankruptcy. You’ll want to check on how chapter 7 and 13 of the laws which is most prominent by users will affect your decision whether bankruptcy would help your credit score or not.

Chapter 7

With chapter 7 changes, you are sure to get a clean slate of health on your debts with regards to those included in the bankruptcy filing. But know that this will not come without going through a means test to ascertain your earnings if enough to pay all or part of it. Getting a loan modification tester would save you in this. You’ll also bear a report regarding your credit capabilities on your report for ten years which may not sound good.

Chapter 13

For this modification, your debts are not totally cleared. You are put in an arrangement with the court on how you’ll pay back monthly depending on your earnings. The duration ranges between 3-5 years for most repayment.