How Your Credit Score Is Impacted When You File Bankruptcy
Filing for bankruptcy can directly impact your credit score. But while many people assume it will only hurt their credit score, few people realize that it may help their credit score in the long run. To determine just what a bankruptcy filing will do to your credit, you need to speak to a qualified attorney.
At Debt Doctors of Missouri, our firm knows how challenging the decision can be to file for bankruptcy. Our lawyers will walk you through the process and ensure that you understand exactly how your financial situation will be affected and when you can expect to recover. If you are considering filing for bankruptcy in Missouri, contact our office at (417) 466-3328 to schedule a free consultation.
How Does Filing for Bankruptcy Impact Your Credit Score?
Most people understand that filing for bankruptcy can negatively impact their credit. A bankruptcy filing shows creditors that you are unable to meet the obligations that you promised to pay. Because lenders may use bankruptcy to question whether you would pay future debts, they may be less willing to lend to you.
While bankruptcy may make it harder to obtain a loan, you might be able to work on improving it. The vast majority of people who file for bankruptcy already have a low credit score; therefore, when they file for bankruptcy, they are not as deeply impacted. Filing for bankruptcy helps them achieve a clean state. Over time the person can work to reestablish her credit line.
How Long Does a Bankruptcy Stay On Your Credit?
A Chapter 7 bankruptcy stays on your credit score for ten (10) years from the date it is filed. A Chapter 13 bankruptcy can negatively impact your credit for up to seven (7) years. During that time, however, you can work to rebuild your credit.
How Do I Rebuild Credit?
Rebuilding credit after bankruptcy is not easy. You will need to work diligently to prove that you will pay your obligations on time. A simple step to take is to sign up for credit monitoring. With credit monitoring, you can ensure that your report is accurate and there is no fraud.
Additionally, you will need to work to pay all of your bills on time. Late or missed payments are heavily disfavored by lenders and will negatively impact your credit. The more on-time payments you make, the more favorable your reputation will be with lenders.
Lastly, you can open a secured credit card account. With a secured credit card, you are able to rebuild your credit. You put a certain amount of money into the account, and then you can use the card regularly. You are limited in spending to however much money you place on the card. Using the card will help you build credit, but it will also help you stay within your budget.
Filing for Bankruptcy in Missouri? Contact Our Office.
If you are considering filing for bankruptcy in Missouri, Contact our office at (417) 466-3328. Our firm will help you understand your rights. We will help you determine the best course of legal action to protect your assets.
