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What Happens To Your Credit Score In Bankruptcy?

Active judgments, collections accounts, charge offs and delinquent debts are reported to the credit reporting agencies. These will have a devastating effect on your credit score. Your credit score will suffer greatly, often dropping hundreds of points. The problem is intensified over time as these derogatory reports linger and just sit on your report. A bankruptcy filing prevents creditors from continuing any such reporting under the regulations of the automatic stay. While the bankruptcy will have a negative affect, sometimes that is far outweighed when the derogatory report is not permitted to continue. Your credit score will have only one direction to go after your bankruptcy — up. If not immediately, most people see a rebound of their credit score in only months. Usually, within 12 to 24 months, your credit score can be high enough to qualify for a many kinds of new credit, even a purchase money mortgage.

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