BANKRUPTCY & CREDIT REPORTS IN ALABAMA
Ferguson & Ferguson
Attorneys at Law
One of the main concerns you may have about filing for bankruptcy is the effect that bankruptcy will have on your credit report, your wife's credit report, and the effect it will have on a cosigners credit report. The effect that a bankruptcy filing may have on another person credit report, is based on the liability of the other person for the debt and the reporting practices of the credit bureaus.
How will Bankruptcy Affect My Credit Report/Score in Alabama?
When you file for bankruptcy in Alabama, the credit bureaus will report a bankruptcy filing on your credit report. The bankruptcy filing can remain on your credit report for 10 years. Generally, credit bureaus remove a Chapter 13 bankruptcy filing from credit reports after 7 years. Each account that was discharged and included in your bankruptcy will have its status listed as " account included in bankruptcy", and should have a zero balance.
How will Bankruptcy Affect My Wife's Credit Report?
If only one spouse files for bankruptcy, then the non-filing should not have a bankruptcy filing reported on their credit report. Each person has their own individual credit report, and credit bureaus should not report a bankruptcy filing on their spouse’s credit report if they did not file for bankruptcy.
In Alabama, if you and your spouse are jointly liable for a debt, and only one spouse files for bankruptcy, then the credit bureau may note the non-filing spouse’s credit report. Although they legally should not report that the non-filing spouse filed for bankruptcy, the information reported about the joint debt may negatively affect the credit score of the non-filing spouse.
How will Bankruptcy Affect A Cosigner's Credit Report?
If you have a friend, family member or other individuals who have assisted you by co-signing for a loan, mortgage, car payment or credit card you may be concerned about how bankruptcy may affect their credit report. First, the cosigner should not receive a bankruptcy filing on their credit report since they have not filed for bankruptcy. Second the cosigners credit report will not be affected for mortgage loans and car loans if the accounts are kept current. Debts that are not kept current will affect the cosigner, regardless of whether they are included in bankruptcy. Cosigners have full responsibility for a debt that they have cosigned for. As a result, any failure to pay the debt back or keep the account current can adversely affect the cosigners credit score and report.
How will Bankruptcy Affect an Authorized Users's Credit Report?
An authorized user on a credit card is not legally responsible for repaying a debt back. Unfortunately, the practice of credit bureaus has been to report the credit history of the credit card on the authorized user’s credit report. As a result, an authorized user may receive a notation on their credit report which indicates that the account has been included in bankruptcy. This notation can adversely affect the credit score of the authorized user, even though they are not legally responsible for repaying the debt back.
There are steps you can take to improve your credit score after you have filed for bankruptcy. If you have questions about your credit report or have questions about filing bankruptcy, call one of our experienced Huntsville bankruptcy attorneys today. Call 256-534-3435. We can help.