Bankruptcy And Your Credit Score
Will My Credit Be Destroyed If I File For Bankruptcy?
The decision to file for bankruptcy is not to be taken likely. While it can offer a chance to get out from under crushing debt, it can also have a negative impact on your credit score. The damage is not however permanent and can give you a chance to establish a more positive credit profile. Depending on your circumstances, your credit score could go up not too after your bankruptcy is discharged.
The Walker Law Firm serves the Greater Dothan, Alabama area and can advise you on whether bankruptcy might be right for you.
After your bankruptcy is discharged, debts that are discharged should start to disappear from your credit report. As this happens, the removal of these collections and any record of the late payments on them may cause your credit score to increase slightly. This could especially be the case if your credit score had already been lowered by missed payments, collections, and defaulted accounts.
How Long Will A Bankruptcy Filing Stay On My Credit Report?
A Chapter 13 filing will show up for 7 years and a Chapter 7 filing will remain for 10 years. One key difference is that Chapter 13 takes 3 to 5 years to discharge and Chapter 7 can be finalized 3 months to one year after filing.
How Can I Rebuild My Credit After Bankruptcy?
Although having a bankruptcy on your credit score does have a negative effect, there are opportunities to rebuild your credit worthiness. Some lenders are willing to work with people who have bankruptcies on their records. Since many petitioners for Chapter 7 surrender their cars to the lenders, some auto financers recognize that they do comprise a market for car loans and that these potential customers have a reduced debt load as their debts get discharged.
While the interest rates will be higher for people who have been in bankruptcy, bankruptcy petitioners get a chance to establish a record of consistent, on-time payments. As these payments continue to be made on time, opportunities to apply for credit at better interest rates could arise.
The Walker Law Firm serves the greater Dotham, Alabama area. If you are considering filing for bankruptcy contact us for a free consultation!