Bankruptcy and Credit
People are often reluctant to file for bankruptcy because they are fearful of the impact this will have on their credit rating. While everyone’s situation is different, filing for bankruptcy may, in the long run, have a positive effect on your credit rating.
Your Credit Rating Will Make It Through Bankruptcy
If you file for Chapter 7 bankruptcy, your debts will be eliminated. Under Chapter 13 bankruptcy, your debts are reorganized into an affordable repayment plan. In either case, once the bankruptcy process is complete you will likely be an attractive candidate for many credit firms.
There are some differences between Chapter 7 and Chapter 13 bankruptcy and the effect of bankruptcy on your credit that are worth noting:
• A Chapter 7 filing will appear on your credit report for 10 years, not seven as is commonly believed. This does not necessarily harm your credit rating for this period as your debt-to-income ratio will be lowered due to the discharge of your debts.
• A Chapter 13 filing reduces debt and puts you on a plan to make consistent repayments to creditors. As a result, you will eventually find yourself on solid financial ground, which will make you more attractive to lenders.
Find Out How Your Credit Will Be Affected
Everyone has different degrees and types of debts. How bankruptcy will affect your credit depends on your personal situation.
Call a Credit Score Attorney
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.