One of the common concerns people have about filing bankruptcy is what impact it will have on their credit score. Although I think people worry too much about credit scores and how soon they’ll be able to acquire more debt after bankruptcy, there is some legitimate concern about making sure credit reports and credit scores don’t hinder the purchase of a new home. In a 2007 SmartMoney.com (joint venture of Dow Jones & Company and Hearst SM Partnership) article, the author says “In many cases, the damage done [from filing bankruptcy] isn’t nearly as bad as expected. Over the long run, obtaining a score high enough to make you eligible for very competitive rates isn’t out of the question.”
According to the author, filing bankruptcy could help a debtor’s credit score over the long term, especially if high balances and late payments have negatively impacted the credit score already. “If your debt payments are crushing you, bankruptcy will give you a much-needed fresh start,” according to the author. One of the credit score improvement strategies the author suggests is to make sure the credit report accurately reflects the discharge of debts and zero balances. If they don’t the credit score will continue to suffer. This is why Nancy L. Thompson Law Office P.C. always advises clients to check their credit report about 4-5 months after the bankruptcy discharge so we can make sure debts are being accurately reported. If they’re not, a violation of the Fair Credit Reporting Act (FCRA) might be pursued to both correct the report and obtain damages for the error.