Bankruptcy & Credit Ratings. Free Advice. StepChange (2024)

FAQs

Is it worth using StepChange? ›

I have spoken to various people at Step Change and every single one of them has been so helpful, friendly and understanding. The process of entering into a DMP was easy, and really took a weight off my shoulders during this cost of living crisis. I'd recommend them to anyone who is having any problems with debt."

You can work on building credit after a bankruptcy by disputing any errors on your reports, taking out a secured credit card or loan, having your rent payments reported to the consumer credit bureaus or becoming an authorized user on someone's credit card.

The exact effects will vary, depending on your credit score and other factors. But according to top scoring model FICO, filing for bankruptcy can send a good credit score of 700 or above plummeting by at least 200 points. If your score is a bit lower—around 680—you can lose between 130 and 150 points.

Can creditors refuse a DMP? Yes – creditors are under no obligation to accept your DMP. They might do this if they don't want to accept reduced payments or feel you could afford to pay more. If they refuse to negotiate with your DMP provider, it can be worth negotiating with them yourself.

An individual voluntary arrangement (IVA) is a debt solution that lets you pay what you can afford towards your debts each month. There are fees, but they are included in your monthly payments. StepChange do not charge for debt advice, but some companies do.

As someone with a 650 credit score, you are firmly in the “fair” territory of credit. You can usually qualify for financial products like a mortgage or car loan, but you will likely pay higher interest rates than someone with a better credit score. The "good" credit range starts at 690.

In some cases, creditors are willing to make a goodwill adjustment if your payment history has been good or if you have a good relationship with them. The process is easy: simply write a letter to your creditor explaining why you paid late. Ask them to forgive the late payment and assure them it won't happen again.

Answer: While the task may seem daunting, it's absolutely possible to rebuild your credit score following a bankruptcy. In fact, when handled properly, many people can achieve a credit score of 700 or more within two years.

Is it hard to get a house after bankruptcy? ›

You can buy a house after bankruptcy, but you'll have to clear a few hurdles if you need to get approved for a mortgage. The two main challenges are rebuilding your credit and finances, and getting through any waiting period your lender may require.

Immediate Impact of Bankruptcy on Credit

How significant the impact is a matter of what score you brought into the bankruptcy filing process. A person with an average 680 score would lose between 130 and 150 points in bankruptcy. Someone with an above-average 780 score would lose between 200 and 240 points.

There is no minimum amount of debt required to file for bankruptcy. That said, if you have less than $10,000 worth of unsecured debt, it's probably not worth it due to lawyer fees, plus long-term consequences.

The truth is that bankruptcy can definitely tank people's credit scores. But in most cases, these people already have a bad credit score because of how much debt they have. In fact, the average credit score after a bankruptcy discharge can vary between 400 and 530.

Is National Debt Relief legit? National Debt Relief is an accredited member of the American Association for Debt Resolution (AADR). It has been around since 2009 and has helped over 600,000 individuals reduce their debt. It also has an A+ rating from the BBB (Better Business Bureau).

DMPs with StepChange Debt Charity

We work out what you can afford to pay to your debts and make sure you are happy with the plan. When you are ready, we will: Contact the people you owe. Explain your situation.

But while a debt management plan does affect your credit history, it does not have a lasting negative effect on your credit score. When you agree to close all of your credit accounts, your credit history stops. Lenders and credit agencies like FICO and VantageScore use your credit history to generate a credit score.