Worried about what a Bankruptcy will do to your credit? It is a common misconception that Bankruptcy, while clearing debt, causes complete financial ruin for 10 years after filing. People often think it is next to impossible to financially recover after bankruptcy, but that is not true. It will take time, patience, and willpower, but you CAN recover. You may even be surprised at how quickly you will begin to see some improvement in your credit score.
Let's take a look at the big picture:
- If you are considering bankruptcy, it's likely that your current credit is poor. Your credit rating drops rapidly once you reach the limits on credit cards and acquire missed or late payments. Once you miss a payment, each passing month makes it more difficult to become current and credit rating will continue to spiral downward. There are things you can do to improve your credit score with a Bankruptcy.
- Filing for bankruptcy is a big decision. There are pros and cons depending on your situation, which is why you should consult with an attorney before making any decisions.
- Many people feel a huge sense of relief after filing for bankruptcy. Creditors are no longer allowed to contact you, so the incessant phone calls will cease. The trip to the mailbox will no longer result in a pile of collection letters.
- Bankruptcies can remain on your credit report for 7 or 10 years, depending upon whether you file for a Chapter 13 or a Chapter 7. It's important to understand that it will NOT take that long before you can get credit cards or loans.
- Most car dealerships will offer loans one year after bankruptcy is filed. Be aware, interest rates will likely be high.
- You do not have to give up your primary residence when you file bankruptcy. Your attorney can help you decide if you should keep the house or let it go. If you let it go, you may face extra scrutiny by landlords, but most will rent if your financials indicate you will be able to make the monthly rent payment. You may even qualify for a mortgage a few years after the bankruptcy.