When filing for bankruptcy, one of the main things to be considered are the after effects of filing and discharging that debt. If you are unfamiliar with bankruptcy you may be wondering, “What is Chapter 7 bankruptcy and how does it differ from other kinds of bankruptcy?” Simply speaking, Chapter 7 bankruptcy is when a trustee is appointed to sell-off the filer’s non-exempt assets in order to pay their debts with the proceeds. This is different from other types of bankruptcy because of the use of a court-appointed trustee to sell off assets rather than the filer themself or someone they select. To learn more about Chapter 7 bankruptcy and bankruptcy discharge keep reading.
A Chapter 7 discharge means that applicable debt, such as credit card debt or personal loan debt, has been settled and essentially wiped from your credit report.
When receiving a Chapter 7 discharge, or any bankruptcy discharge, you will receive a discharge letter which is a court document signed by your bankruptcy judge notifying you that all eligible debts have been discharged. Receiving this letter also indicates that creditors can no longer collect on those debts; they are also sent a copy of the discharge letter as notification. Receiving a Chapter 7 bankruptcy discharge letter signifies that the debt that the judge deemed eligible for discharge has been dealt with and you are no longer liable for those debts.
To answer the main question of what happens after a Chapter 7 discharge and specifically, will your credit score go up after a Chapter 7 discharge, it depends on the situation of your bankruptcy and how long ago you were discharged.
After your debt is discharged from a bankruptcy filing, it is likely that your credit score will go up over time. Filing for bankruptcy will lower your credit score; however, once debts are discharged you can begin working on recovery. Because you are no longer in debt, or at least to the extent you were previously, your credit report will take into account the lack of debt and likely raise your credit score. It can take months or even years for a credit score to recover, and it is not a guarantee that it will fully recover, especially if you begin new lines of credit and do not make payments as required.
Running a credit score check every month or so can allow you to monitor your credit and the potential progress of increasing your score. While a discharge of Chapter 7 bankruptcy does not guarantee a full credit score recovery, there are other actions you can take to help your score improve. Paying bills on time, diversifying your credit, and keeping your credit utilization low are all actions you can take to help increase your credit score.
While filing for bankruptcy may be the only option for some, consider seeking legal advice before filing, as you cannot file again for at least 180 days after you originally filed. Chapter 7 bankruptcy also may not discharge all of your debts. Tax debts, government debts, child support or alimony debt, student loan debt, and more are not eligible for discharge under bankruptcy filings. If you have debt in those categories as well as dischargeable debts, seek legal guidance to walk you through the pros and cons of filing bankruptcy.
Contact The Law Office of Corey Beck to get legal advice from experts on Chapter 7 bankruptcy and allow us to guide you through the bankruptcy process. Call us at (702) 678-1999 or request a consultation here.
