For many, filing for bankruptcy is the last option to help reset their finances when they fall into unmanageable debts. However, while this can help eliminate a considerable amount of your debt, this process is not without its drawbacks. As such, if you are considering filing, it is critical to understand the impact this process will have on your credit score, including how long it will remain on your report. If you’re unsure of these matters, the following blog explores what you should know, including the importance of working with a Montgomery County bankruptcy lawyer to help you navigate these complicated times.
What Impact Will Bankruptcy Have on My Credit Score?
If you make the decision to file for bankruptcy, it’s imperative to understand the impact this process can have on your credit score. Typically, if you file, you’ll find that regardless of which chapter you file, your credit score will drastically fall. This is because your borrowing history makes up the largest percentage of your FICO credit score at 35%. Filing for bankruptcy essentially means that you acknowledge that you are unable to repay the owed debt. As a result, creditors are much less likely to lend to you because of this.
In the event a creditor does agree to extend a loan in your name, you can expect that the interest rates will be astronomical in comparison to what you would have paid without a bankruptcy filing on your report.
How Long Will a Filing Stay on My Credit Report?
In general, all information compiled on your credit report, whether positive or negative, will eventually be removed. However, it will remain for a considerable amount of time to ensure that creditors have a fair understanding of your history as a consumer.
As such, if you file for Chapter 7 bankruptcy, this will remain on your credit report for ten years from the date on which you filed. If you pursue Chapter 13, it will remain on your report for seven years. While bankruptcy can drastically impact your credit score immediately after filing, its impact will be reduced over time as you begin rebuilding your credit. However, it’s critical to understand that some lenders will be hesitant to extend loans to you following a filing, even if it was years in the past.
As you can see, bankruptcy can have a considerable impact on your credit score and subsequent ability to obtain loans. However, you should note that there are steps you can take to reduce the impact that filing will have on your credit, thus improving your ability to obtain loans.
When you are ready to declare bankruptcy, it is imperative to connect with an experienced attorney with Mudrick & Zucker, P.C. We understand how difficult these matters can be to navigate, which is why we will do everything in our power to help you fight for the best possible outcome for your circumstances. When you need assistance, contact our team to learn how we can fight for you during these complicated matters.
