There are a lot of misconceptions regarding how bankruptcy affects your credit score. Yes, it will damage your credit score and make getting a loan difficult once you emerge from bankruptcy, but there are many more pros than cons, in our estimation, to filing for bankruptcy when debt is crushing you.
Bankruptcy typically lowers an individual’s credit score by around 150-230 points. This is a big drop—and will make a person with a good credit score drop into the bad credit score ranking. But let’s be honest here: if you are in need of filing for bankruptcy, chances are your credit score is not looking good already. Any bankruptcy attorney, after reviewing your personal case (which can be done here for a no obligation evaluation!) that your credit score is already damaged to begin with because of the large amount of debt you currently carry.
The effects of bankruptcy on your credit mean that you will have difficulty getting car loans, low interest credit cards or a mortgage once your bankruptcy debt has been discharged and you emerge from the bankruptcy itself. For many people, this can be a problem if they want to purchase a home soon or want to buy a new car. But don’t fear—there are many companies out there that are now giving people loans and credit cards once they’re out of bankruptcy because, with the person’s debt now gone, they can afford to pay regular bills like a car loan!
Bankruptcy stays on your credit report for 10-years. We know, this is a long time, but thinking about living with the crushing debt you are under for those same 10-years and eliminating it and dealing with some minor inconveniences is the way to go. The good thing is this: even though your bankruptcy stays on your credit report for 10 years, your credit score, post-bankruptcy, will begin to rebuild, which is one of the biggest factors lenders use when considering giving loans or credit cards.
For most people, the hit to a person’s credit score because of filing for bankruptcy is no different than allowing their debt to pile up and incur late fees and charges which are reported to the credit bureaus as well. Finding a bankruptcy attorney to discuss the specifics of your case is easy to do and should be explored before making a decision.