If you’re considering filing for bankruptcy, it’s important to know how it will affect your finances moving forward, especially your credit score. It is certainly true that bankruptcy will hurt your credit, and many people who decide against bankruptcy as an option do so because they are afraid of how it will impact their credit score. However, not filing for bankruptcy and letting your debts go into collections will typically have a worse effect on your score.
The impact of declaring bankruptcy
If you’re not sure what to do, it’s best to consult with an experienced bankruptcy attorney in the Bronx for guidance. In the meantime, here is some specific information about how bankruptcy will affect your credit:
- Credit score. Each case is unique, but filing for bankruptcy will mostly likely cause a drop in your credit score of between 130 and 200 points. Once you file bankruptcy, it can be very difficult to get credit or buy a home for many years.
- Credit report. The most common bankruptcy filed, Chapter 7, will stay on your credit report for ten years. Most other bankruptcies will remain on your credit report for seven years.
- Recovery. The good news is that you can take steps to improve your credit immediately after your bankruptcy. One way to do so is to establish a new starter line of credit, like a secured credit card, and make payments on time that keep your debt levels low. Opening a store credit card or taking a car loan are also ways to begin reestablishing your credit score.
- Time. When it comes to bankruptcy, time is on your side. Although your credit score will plummet, as you rebuild and establish better credit practices, your score will start to rebound. Once the allotted times has passed and the bankruptcy is removed from your credit report, it will no longer influence your credit score.
If you want more information about how bankruptcy will affect your credit score, contact a knowledgeable Bronx bankruptcy lawyer. Not only can an attorney help you navigate the complicated legal system, he or she can offer long-term solutions to your debt obstacles. Your bankruptcy lawyer can also advise you about choosing the right credit counseling organization and oversee the legal aspects of your personalized debt relief plan.