One of the most damaging myths perpetuated about filing bankruptcy in Nevada is the negative impact it will have on your credit score.
Creditors and collection agencies seemingly never miss a chance to remind consumers of the damage of negative reporting. A Las Vegas bankruptcy attorney at Aaron & Paternoster, LTD can review the individual facts and circumstances of a consumer’s case and help determine the best course of action. But the fact remains that filing bankruptcy is often the first step in restoring a consumer’s credit profile. Equally as important, it will insulate a consumer from future collection action or other consequences of old foreclosure actions or bad debt.
In most cases, consumers wait far longer than they should before seeking help from a bankruptcy law firm. By then, missed payments, maxed out credit cards, judgements, liens and other negative actions have all but decimated their credit score. However, once a Chapter 7 liquidation bankruptcy or a Chapter 13 reorganization bankruptcy is filed, all collection actions must cease. Creditors and collection agencies must stop calling you. Court actions, whether part of a foreclosure, divorce case, or other civil action, are tolled until the completion of the bankruptcy proceedings.
Consumers who file bankruptcy enjoy a number of protections and exemptions, and are typically able to keep their primary residence (if it makes financial sense to do so), a vehicle, clothing, personal belongings, household furnishings and other items. Eligible pensions and retirements accounts are also fully protected. While a few debts are exempt from discharge, including tax liens and child support payments, most unsecured debt will be forgiven, including credit card and medical debt.
With a fresh start, most find they are a better credit risk than before filing, and are quickly able to secure credit cards and automobile loans. Often at rates more favorable than those for which they would have been eligible (had they been approved for credit at all) prior to filing. It is at this stage that so many of these consumers go on to lead stellar financial lives, given a fresh start and the wisdom that comes with it.
CNN Money recently published a consumer’s guide to understanding, monitoring and rebuilding credit.
Knowledge: Understand how credit reporting works. Utilities and service providers are among those who do not report. Learn how long items stay on your credit report and what factors comprise your score.
Check your Report: After your bankruptcy is discharged, get a copy of your credit report from all three credit bureaus. Clear up any errors and familiarize yourself with the components of your report so you have a better idea how to build a stellar rating going forward.
Pay your bills on time: From Day 1, Week 1, make it a priority to keep your financial house in order. How you pay your bills is the single biggest factor in your credit rating, generating 35 percent of your score.
Far from the credit-rating destroyer it’s often made out to be, filing for bankruptcy is the first step on the road to a bright financial future.