How does bankruptcy affect your credit ratings


The absence of credit is a huge inconvenience and a let-down. It is imperative that we take a good care of our credit reputation so as not to end up at the crossroads with our lenders. Note that bankruptcy will stay in your record for more decades.

credit ratings

Lenders will fear to lend you money

Lenders may be more than willing to give you a hand in your endeavors to resurface again. However, a single glance at that bankruptcy record staining your credit report is enough to scare them away - they will flee for cover and you will be left alone wandering from one to the other! For your information bankruptcy wields a significant impact that affects your credit worthiness for years: A decade to be more specific.

Bankruptcy is meant only for those with incomprehensible debt record and those who seem to have hit a snag. If it has reached a situation that you feel like life has turned against you as you try to make ends meet, then waste no more time; consider bankruptcy. Though it is true that your credit rating will be in tatters for the moment, but the bigger picture is that you will finally get to liberate yourself from the debt bondage. Later on, your credit rating will begin to rise. On the other hand, if you got ill advised to try out bankruptcy as a precautionary measure for yet-to-happen financial crises, I beg to differ - filing bankruptcy is definitely not for you. You will only open Pandora’s Box and direct all the attention to yourself!

There are a number of issues that you ought to know before setting out to file for bankruptcy. With this knowledge, you will soon realize that Bankruptcy declaration is only for the brave and risk takers. There is no room for the faint hearted. These are what you should bear in mind as you fill your bankruptcy:

bankruptcy affect your credit ratings
  • The credit cards that you often source for will now be a thing of the past. Likewise to bank loans and other credit means.
  • In addition to emotional torture, you will become a subject of numerous restrictions both from government agencies and private firms. For instance, with all the qualifications experience you have accumulated over the years, nobody will be willing to hire you. You will be forced to make disclosure of your credit situation as the law permits.

Is there any other means to clear your debts?

Otherwise, it is really hard to make a clear prediction on how your credit score will deteriorate after you are declared bankrupt. What is for sure is that the extent of impact to your credit rating is highly dependent on the current standings on your credit and the extra information characterizing your credit report. As FICO employs a tedious formula in the calculation of your credit rating, you will only know of the exact drop after you file. To steer clear of any speculation and uncertainties, it is advisable that you opt for other means to clear your debt including the following:

  • Taking a personal initiative to make payments - It might be a hard thing to do, but not impossible.
  • Finding out about possible means to enter into a debt management plan as offered by a number of credit consulting agencies.
  • Weighing on consolidation
  • Settlement
affect your credit ratings

From the above, a choice of any of the first three is a sure way of keeping your credit score intact. But the availability of any of them as an option is reliant on your level of income, monthly expenses or the existing status of your credit and bank accounts.

You can rebuild your financial life even after bankruptcy

Filing for bankruptcy is not the end of the world; many have done so and have successfully re-emerged from the crisis in the end. However, you should concentrate on rebuilding and raising your credit scour immediately your finance reserves get back on track. One of the ways that you can do this is by observing all the rules laid down by the new lenders and making due to payments in time.

You should also look into ways of revamping the accounts that managed to see the light of the day after your small crisis. Though bankruptcy information will be on your report for up to 10 years, it will gradually become less of an issue as you regain your previous status by adding in some positive details on your report.

Craig R. Chlarson - Utah Bankruptcy Attorney

My name is Craig R. Chlarson. Whether you are seeking to eliminate your debt, typically through a chapter 7 filing, or whether you are seeking to reorganize your debt, typically through a chapter 13 filing, or even if you have basic bankruptcy questions, call me today. I can help you.

To schedule an appointment, call (435) 901-3449

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