What if you were told that filing bankruptcy can ultimately improve your credit score ?

Posted on January 31, 2014. Filed under: Consumer Alerts, Consumer Bankruptcy Attorney | Tags: , , |

amazed person

Sounds amazing, right ?

But the facts are pretty much established that it will.

How do we know this ?

For the first few months, most clients see no change in their credit score. After about the first year or so, folks will generally see their credit score improve and continue to improve year after year as long as they establish good financial practices and goals.

What ?! You are thinking: “But I thought filing bankruptcy totally destroyed my credit ?”

But it really doesn’t

I always tell clients that there are three reasons we know this.

#1 Having practiced bankruptcy law for the past 25 years, we have had folks that have filed, and need to come back several years later and file again. Since the first bankruptcy, they have incurred additional credit such as home loans, car loans, and other debt and for example, may have a loss of income, and have to file bankruptcy again. The point is they were able to obtain credit after the first bankruptcy.

#2 Approximately 1 to 1.5 million folks file bankruptcy every year in the United States. If the banks and lending companies had a policy of never lending to someone who had a bankruptcy on their credit report, they wouldn’t be in business. For the first few years after bankruptcy, you may have to pay a higher interest rate than someone who has not filed bankruptcy, but credit will likely be available to you if needed.

#3 In the alternative, if you don’t file bankruptcy, the late payments and delinquent debt continue to mount on your credit report and drive your score lower and lower. After filing bankruptcy, any potential new creditor that looks at your credit report will see that your old debt (which still shows on the credit report) has been discharged in bankruptcy and you can’t be forced to pay it and not be able to pay that new creditor. They may, then, feel more comfortable lending to you. Also, that new creditor knows that folks can only file Chapter 7 bankruptcy every 8 years.

Bankruptcy is a time-honored practice that can enable folks to get back on their feet and provide for their family. It is available as a Federal Law provided for in the United States Constitution. If you think it can help, give us a call at Kentucky Bankruptcy Attorney John Rogers, toll-free 1-888-651-9353

photo credit: typexnick via photopin cc

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