Des Moines, IA (Law Firm Newswire) September 13, 2012 – Many debtors are surprised to discover declaring bankruptcy affects their car insurance premiums.
Many Americans understand that when they file for bankruptcy, their credit reports reflect that fact. What many do not realize is that more and more auto insurance companies are checking the credit ratings of existing and potential clients. This may well affect insurance premiums, according to Kevin Ahrenholz, an Iowa bankruptcy lawyer. According to recent statistics released by Nationwide Insurance, roughly 92 percent of car insurance companies do use credit scoring to calculate auto insurance premiums.
Insurers are looking for a client’s history when it comes to paying bills, and a credit report is usually a good indication of how reliable a person may be when it comes to paying their insurance. While this practice has raised questions across the nation, many insurance agencies take the position that a poor payment history, indicating shaky finances, may lead to bad driving or unnecessary claims to get money.
Whether or not is this true or has been proven by any kind of a study is open to debate. However, this issue has become a flashpoint for many people who have declared bankruptcy and then find out their insurance company is checking their credit ratings. In fairness, once an individual has declared Chapter 7 and has been discharged, they are free of debt. Penalizing them after the fact seems unfair.
Chapter 7 bankruptcies remain on report at least 10 years. Chapter 13 bankruptcies may remain in a credit report for seven years. Over that period of time, numerous car insurance companies may check the debtor’s status and payment history. Each time someone accesses a credit report for information like that, it also affects the person’s credit rating.
In most instances, this kind of information is provided to a debtor by a competent bankruptcy lawyer, in order to ensure a client is fully informed of the consequences of filing for bankruptcy. It helps the debtor make relevant choices when he or she understands the scope of the bankruptcy process.
Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact an Iowa bankruptcy attorney, Iowa bankruptcy lawyer, or set up an appointment, visit http://www.iowachapter7.com or call 1.877.888.1766.
309 Court Ave., Suite 805
Des Moines, IA 50309
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