How Will Bankruptcy Affect My Credit?
Bankruptcy can help a great deal if you are struggling with your finances. Bankruptcy laws provide debtors with much-needed relief from their debts and give them a fresh start. However, this fresh start comes at a price, which is usually a significant hit to the debtor’s credit. On the other hand, filing for bankruptcy can also help your credit in the long and short term.
How Can Bankruptcy Impact My Credit Score?
If you are considering filing for bankruptcy, you are probably concerned about how it will impact your credit score. While creditors do not like seeing a bankruptcy on credit reports, how it will affect your credit score will depend mostly on whether you had good credit before you filed for bankruptcy.
If you have a high debt-to-asset ratio, meaning you have more debts than assets, and you are delinquent on several accounts, you already have a bad credit score. Filing for bankruptcy will further lower your credit score, but not too much. On the other hand, if you have a good credit rating, bankruptcy will massively damage it.
Will My Credit Improve If I File for Bankruptcy?
While bankruptcy will not improve your credit score right away, it can be the fastest way for many people to improve their credit. If you have several accounts in collection or are behind on payments, bankruptcy can help your finances faster than other debt management options.
The reason for this is that bankruptcy can discharge various types of debts, which will give you the opportunity to start over again financially. When you get your financial health in check and reduce your debts, you can lower your debt-to-income ratio, begin making credit and loan payments on time, and do other things to help rebuild your credit rating.
However, if you continue to make late payments, default on your debts, increase your debt, and do not file for bankruptcy on time, you will never get a handle on your finances and improve your credit rating. It’s also vital to note that bankruptcy may not be the best option for everyone. There are other debt relief management options available, depending on the person’s specific situation. When in doubt, discuss your case with a Port St. Lucie bankruptcy attorney.
How Long Can Bankruptcy Appear On Credit Reports?
A bankruptcy can appear on a credit report for seven to ten years. If you’re considering getting a job with a yearly income higher than $75,000 or applying for a life insurance policy or loan amounting to more than $150,000, credit reporting agencies may report the bankruptcy for up to 10 years. Usually, however, they will delete the bankruptcy on record after 10 years.
Get Legal Help From a Skilled Port St. Lucie Bankruptcy Attorney Now
If you need more information about filing for bankruptcy, you can turn to Brian McMahon, our Port St. Lucie bankruptcy attorney, for legal advice to determine the best options for your case. Dial 772-228-6701 or complete our online form to set up your free case evaluation with our Port St. Lucie bankruptcy attorney.