Chapter 11 bankruptcy is a type of debt re-organization available to individuals and small business owners or corporations. It is more like chapter 13 bankruptcy but there's a major difference between the two. In chapter 13 bankruptcy, the debtor must be able to repay their debt within 3-5 years. This limitation is not present with Chapter 11. Thus, large business owners generally opt for chapter 11 bankruptcy.
Bankruptcy hurts your credit and lowers your credit score generally by 200-350 points. There are four kinds of bankruptcy (chapter 7, 13, 11, 12) but its effect on your credit score is invariably the same. Bankruptcy has a long lasting negative effect on your credit and your ability to get new credit. However, this does not mean that the corporation cannot repair their credit with time, just like an individual can.
Ways to repair your credit
There are various ways in which you can repair your credit after chapter 11. Some are outlined below.
- Review credit reports – Get copies of your corporation's credit report after the discharge of the bankruptcy case. Review your credit reports carefully and make sure that all of the debts included in the bankruptcy have been listed as "discharged in bankruptcy". If this is not the case, you can dispute the listings with the business credit bureaus.
- Re-affirm loans and mortgages – During the bankruptcy case, remember to reaffirm your loans and mortgages with the creditors and lenders. If you do that once you start making payments, your company's credit history will start building up. This in turn will improve your company's credit score.
- Try getting new credit – Try to get new credit after your bankruptcy gets discharged. With your low credit score you may not qualify for unsecured credit cards for your employees. But, you may be able to apply for a secured business loan.
- Pay existing debts – Make on-time payments on your existing debts and try not to miss the payments. Late payments and missed payments will hurt your credit furthermore. As a result, your credit score will be hit.
- Develop a budget – Along with all the above tactics maintain a budget and stick to it. Avoid spending more and avoid maxing out your corporate expense cards. If you maintain a strict budget, you will be able to use your cards lightly.
690 is a good credit score, but in order to get the best deal on your new lines of credit, you need to have a credit score above 720. I think that if you make the full use of your credit cards by making regular purchases of your necessities with the cards and repay it within the due date, you can take up your credit score above 700 within a few months. Once you take it above 700, make sure that you do not make any late payments or become delinquent on your existing loans.
Since bankruptcy listing has gone out of your credit report, your credit score would improve. Moreover, if you do not have a credit card to improve your score, you can easily get one with a score of 690. You score is no doubt a good one, but a score above 700 is considered as an excellent one.
Yes, your credit score is sufficient to get finance on a new air-conditioner. After getting the loan to purchase the air-conditioner, try and pay the monthly installments within the due date and avoid any late payments. This will help you to improve your credit score further.
690 Score....
Hi, I also have a score of 690. My goal is to reach the 700 margin but have already done everything I can to increase my score; by paying off all credit cards, & payed off any and all debts. I have read you're comments on using a credit card and paying the amounts on full before it's due date. DOES THIS REALLY WORK?? I will be appplying for a mortage loan in the summer and those extra points would really help me in getting a better interest rate......
cc
Yes..it DOES work. I have bad credit. I was approved for a Unsecured CC a few months ago. Ever month I've paid the FULL balance before the due date. My score HAS gone up because of it. Hope this answers your question, somewhat.
Hello Joey, I can tell you from experience that Justin and Carol gave you (or the other poster) excellent advice. My hubby had a score of around 690 after a lot of credit repairing on out part (some bills were not ours and we had to prove this). We started out by getting a credit card and would make a purchase and not pay it off right away. Make regular payments and just make more than they ask for. Say you wanted an air conditioner and it was $400. Pay four $100 payments. This builds your score better than paying an item off as soon as you get it.
690 is FAIR
I have a free report from Capital One Credit Card with Experian.
My credit score is 690, and they said 690 is Fair.
Why ?
I hear 680 is Good ?
I have inquired
My bankruptcy fell off my credit report this month. I have a 691 rating thru Equifax which is the one most places use for buying a home, car, etc. I tried now to negotiate a better rate with Capital one ( i have 2 cards) and they are not helpful, although when I went to cancel my other card with them--they wanted to work with me. Capital one is a joke. I have a really high rating with Experian and TransUnion, but it doesn't mean diddly.
Chapter7
Carol, I am considering bankruptcy, Chapter 7, because I am 3 months behind on my first, have a home equity and not worked in 18 months. My payments are $2300 a month and I have a retirement of $2200 and unemployment of $2000 which will end in December. My question is will I automatically lose my home. The comps in the area range about $20000 less than what my mortgage is so there is no equity in the home right now. Most of my unsecured debts like credit cards are on a payment plan right now but the two mortgages are killing me. Would Chapter 7 be a good option? A banker told me if I was going to file I should do a 7 versus a 13 because they both affect your score the same and one -13- keeps all the debt. Thanks. Nancy
Establisthing Credit
Cerol,
I,m finding it very difficult to optain new credit, even a credit Card. I have a discharged Chapter 11. 2005. Score on Equifax 705. How can you advise please. S. H.
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9Gaoeb Thanks again for the blog article.Thanks Again. Awesome.
Chapter 11
Is an individual Chapter 11 treated the same as a Chapter 13 by the credit reporting agencies?
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