After learning that filing bankruptcy may eliminate credit card debt, many people instinctively ask: "What’s the catch?"
In fact, one of the biggest concerns that people have when considering bankruptcy is how it will affect their credit score.
Filing bankruptcy does affect your credit score, but maybe not in ways you’d expect.
Your credit score is affected by many actions, including:
If you need the serious debt relief of bankruptcy, then your credit score may already be low because of:
But even with a bankruptcy on your report, you can improve your credit score, often by leaps and bounds. In fact, because bankruptcy was designed to wipe your financial slate clean, this can be a great opportunity to start fresh with new financial habits.
Your credit score constantly changes with the actions you take. The end of your bankruptcy case can be a great time to start building up new credit habits. If, after filing, you open new credit accounts and pay them off on time, your credit score can go up and up.
Initially, after your case it could be difficult to get major loans without a co-signer for buying a house or new car. But, with a fresh start and new habits, in a few years you could qualify for good rates on loans for these purchases.
When considering bankruptcy, your credit score should be lower on your list of concerns. If you are already in deep credit card debt then your credit score is already hurting. Filing bankruptcy can help you get the fresh start and protection you need to get control of your debt, and rebuild your score.
For more complete details on how filing bankruptcy could impact all aspects of your life, from your debt to your credit score, speak with a local bankruptcy attorney. Simply complete the free form on this page and we’ll connect you with a local bankruptcy lawyer right away.