Wednesday, January 11, 2017

Will My Credit Be Ruined If I File Bankruptcy?

One of the biggest concerns we hear from people who are considering filing bankruptcy is how long the case stays on their credit report? As we all know, your credit rating plays a big role in what type of interest rate you can get when you apply for a loan, but it can also impact other things. For instance, did you know that your auto insurance provider might quote you a higher rate if they consider you to have “bad credit”? Or, you might be required to put down a deposit to have utilities turned on if your credit score is considered too low. So the concern over how bankruptcy affects your credit is a valid concern.

It is true that when you file bankruptcy it is marked on your credit. But this does not mean it is the end of the world for you credit-wise, or that you will never again be able to borrow money. In fact, here are some ways your credit can start to improve, even with a bankruptcy:

         If you reaffirm a debt, the lender will note your account as being paid rather than discharged in bankruptcy.
         If you make direct payments to a lender, like your mortgage holder in a Chapter 13 case, your house payments will be shown as paid on your credit report.
Filing bankruptcy allows you to get back on your feet quickly, which means you can start making payments on things that you have not been able to pay. When you do this, the lenders take note and pretty soon your payment patterns will begin to appear on your credit. Rather than having an account being reported as past due, you will start to see your accounts be noted that you are paying. Bankruptcy puts you in a position to be able to make your payments by eliminating or reducing the debts you are not able to pay, so you can pay for other things. Your debt to income ratio also drops when some of your debts are eliminated through bankruptcy, and this can help your credit score go up as well. For help with getting back on track financially, call our office today.

If you have more questions about bankruptcy or need help deciding what to do about overwhelming debt, contact us at We will help by coming up with solutions that work for you and have multiple locations to meet your needs for office visits.

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