How Will Bankruptcy Affect My Credit?

An individual’s ability and willingness to meet his or her financial obligations determines creditworthiness. All creditors use different criteria and having a bankruptcy on your credit report is usually only one factor used in deciding your creditworthiness. So there really is no definitive answer as to how bankruptcy will affect your credit because every creditor has unique methods of analyzing different aspects of a consumer’s file and every person’s financial situation is different.

But a bankruptcy often puts people in a better position to pay future bills and that can result in an improved credit score. Bankruptcy wipes out your old debts, resulting in zero balances on your credit report. And after you file for bankruptcy, you are prevented from filing a subsequent bankruptcy for a number of years. Some creditors, who know that they are protected from another bankruptcy for an extended period of time, will regularly issue new credit to individuals who recently finished a bankruptcy case. You can likely get credit even before your bankruptcy matter is completed. The real issue will probably be what interest rates and fees you will have to pay and whether you can manage the monthly payments to avoid beginning a new cycle of painful financial problems.

Regarding your credit score specifically, it is also important to keep in mind that your score might already be quite low if you are behind on your bills. In many instances, bankruptcy does not lower a score by much, if at all, because a bankruptcy’s potential harm to your score can be outweighed by the tremendous positive effect wiping out both debt and numerous delinquent accounts have. There are many scenarios in which filing for bankruptcy actually can raise your credit score. 

Bankruptcy will stay on your credit report for ten years from the date it was filed. Regardless of your credit score, it is important to keep in mind the tremendous benefit you can receive from seeking relief under the United States Bankruptcy Code.

After your case, discharged debts should be listed on your credit report as having a zero balance, signifying that you do not owe anything on that debt. Improper credit reporting can adversely affect your credit score and make it harder to get loans. So it is a good idea to review your credit report after your bankruptcy is completed and we’ll give you all the tools you’ll need to follow up to get free credit reports. Also, if we find a discharged debt that reappears, also known as “zombie debt,” we’ll help you file a lawsuit to fix your credit and can get money for you for a “discharge violation,” and/or Fair Credit Reporting Act violation. We enjoy pursuing these types of actions and have been successful suing creditors for many different types of debt collection violations.

If you have questions regarding credit issues or any other matters pertaining to bankruptcy, call us today at (754) 400-5150 or contact us online. Let the lawyers and staff at the Law Offices of Evan M. Rosen serve you!