How does Bankruptcy Affect My Credit Score?

When faced with too many bills and debts and not enough income some people face the inevitability of going bankrupt. This is a very difficult decision for a person to make and shouldn’t be taken lightly.  Before an individual decides to get a bankruptcy attorney and go through a debt relief plan they want to know what happens to their credit.

The point of bankruptcy is to have your debts reduced or dismissed; this is one of the benefits, but also the factor that affects your credit. Another benefit of bankruptcy is that it stops all of the harassing phone calls and other frustrating tactics used by collection agencies.

Unfortunately Chapter 7 and Chapter 13 bankruptcy affects a person’s overall credit score. It can lower your score by 300 to 600 points and stay on your credit report for up to ten years. This will have an effect on your ability to get credit in the future, but it also shows you are taking charge of money problems and taking the necessary steps to repair the damage.

If you are already a great deal in debt you credit score has already taken a hit. Many companies will give loans and credit cards to people who have gone through bankruptcy; you can just anticipate that the interest rates will be high. You can also begin to repair your credit score by obtaining a secured credit card.

A debtor may have no other option than to hire a bankruptcy lawyer and go through this daunting process, but in the end they will no longer be saddled with debt.

Before you decide on Chapter 13 or Chapter 7, you should consult with a bankruptcy attorney and honestly disclose all of your financial problems so they can put you in a debt protection plan that is appropriate for your needs.