Baton Rouge Office225-769-1414
New Orleans/Metairie Office504-831-1222

May 2018 Archives

Tips for recovering from bankruptcy

A Lending Tree study found that most people who file for bankruptcy recover with a credit score of at least 640 within a few years. Some people in Louisiana may be among the 40 percent whose credit score reached 640 within a year. Within two years, nearly two-thirds had this score.

How bankruptcies are reported to credit agencies

If a person files for Chapter 13 bankruptcy, it will generally stay on his or her credit report for seven years. If a person files for Chapter 7 bankruptcy, it will generally stay on his or her credit report for up to 10 years. In a Chapter 13 case, a court will allow a Louisiana debtor to use regular income to pay off debts over a period of three or five years.

How bankruptcy impacts a person's ability to borrow

There were more than 700,000 personal bankruptcies filed in 2017 according to a study done by LendingTree. Medical and credit card debt were among the most common reasons why Louisiana residents filed for protection from creditors. Although bankruptcy can help a person overcome a debt, it can also cause credit problems in the short-term. For instance, someone who is a year removed from bankruptcy will be charged an interest rate of 10.8 percent.

The reason credit card rates are increasing

For Louisiana residents and others with credit card debt, an increase in the federal funds rate can lead to higher bills. This is because the fed funds rate and credit card interest rates are linked together. In March 2018, the Federal Reserve increased this rate to 1.75 percent. While other debts can be impacted by changes to this rate, credit card balances are the most likely to be subject to variable rates.