If you are one of the few people who file bankruptcy with a good credit report and high credit score, filing bankruptcy will result in an immediate and substantial drop in your credit score. Over time, your credit score will rise, and if you make wise credit decisions and timely pay your debts, your score can again reach lofty heights.
However, truth be told, the vast majority of people who file bankruptcy already have poor or bad credit. Their credit reports usually show an abundance of late payments, high balances, and charged-off accounts. Bankruptcy will do no harm to these people whose credit is already shot.
Believe it or not, filing bankruptcy can actually result in an improved credit score for many consumers. Why? To start with, a person’s credit report is largely wiped clean when he or she files bankruptcy. High balances are removed as are any late payments or records of unpaid debts. Instead, the accounts included in the bankruptcy will be marked as “Included in Chapter 7 Bankruptcy” or “Included in Chapter 13 Wage Earner Plan,” depending on which type of bankruptcy is filed.
For more on how filing bankruptcy can actually raise a credit score, read this article from SmartMoney Magazine.
If you are struggling with debt problems and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation. I would count it a privilege to be able to visit with you in a relaxed and confidential environment where I’ll answer all of your questions in plain English and give you the straight scoop on the pros and cons of bankruptcy as related to your specific situation.
