When clients come to us seeking guidance about whether they should file for bankruptcy, they frequently express concern about the impact that doing so will have on their credit score, and their ability to get credit in the future. That is a valid concern. There is no doubt that bankruptcy will cause your credit score to plummet, but the truth is that being unable to pay your bills will do the same. When weighing your options, you need to fully understand the impact that filing for bankruptcy will have, in terms of both immediate impact and the long-term effect, as well as what you can do to counter any negative effects of your decision. Here’s what’s most important for you to know.

  • Your Credit Score Is Definitely Going to Drop

If your previous credit score was solidly at 700 or above, you are going to see it drop by at least 200 points. If your score was lower your drop will not be as precipitous, but you are still going to fall, probably by about 125 to 150 points.

  • The Bankruptcy Will Stay On Your Record For Several Years

By law, filing for a Chapter 7 bankruptcy becomes a matter of public record for a full ten years, and even if you opt for a Chapter 13 reorganization the references to that filing will be out there for seven years. There is no escaping the fact of your filing, even if it discharged your debts, judgments, tax liens.

  • Time Heals All Wounds

As is true of so many other negative events in our lives, the more time goes by, the less impact your bankruptcy filing will have. Even during the years that the bankruptcy is included in your credit report, the erasure of existing debts will automatically help boost your report, and if you begin paying your bills in a timely way that will be reflected and your credit score will rise. And even though ten years sounds like a lot of time, it can go by in a blink of an eye.

There are also steps that you can take to help yourself build new credit and minimize the impact of a bankruptcy filing. For more information on filing for bankruptcy and the positive steps that you can take going forward, contact us today to set up a time to meet.

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