Important steps to getting past a bankruptcy

When a Michigan resident files for Chapter 7 bankruptcy, it will stay on their credit report for 10 years. Those who file for Chapter 13 bankruptcy will see it remain on their credit reports for seven years. However, the effects of the bankruptcy do not necessarily last for that long. According to a study done by TransUnion, only 10 percent of those who file for bankruptcy will do so again.

An important step an individual should take when overcoming a bankruptcy is reading their credit report. Individuals are allowed one free copy of their report per year from each of the three major credit bureaus. If errors are discovered on the report, a person may contact the lender who reported the error or report it directly to the credit bureau. Errors may include duplicate entries or outstanding judgments that should have been reported.

When rebuilding credit, it is important for an individual to keep their credit card balances under 30 percent of the total credit limit. It is also critical to make debt payments on time as a timely payment history is worth 35 percent of a person's FICO score. Those who are just coming off of a bankruptcy may want to consider applying for a secured credit card.

Individuals facing financial challenges may find debt relief through bankruptcy. It may be possible to discharge debts without the need to give up property such as a house or car. In some cases, debts may be reorganized and repaid over a three- or five-year period. While filing for bankruptcy does not make a foreclosure or repossession go away, creditors cannot take such actions during a repayment period. This may allow enough time to renegotiate the terms of a loan.