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How Does Bankruptcy Affect Credit?

If you are having a hard time paying the bills and are behind on certain things, chances are your credit score has taken a hit. Your credit score is what lenders rely upon when making loans, and a higher score usually results in being offered more favorable lending terms. The most important of these terms is typically the interest rate, and people with credit that is considered good usually get loans at lower rates. This translates into a lower monthly payment, which can save the borrower hundreds or thousands of dollars over the life of the loan. For these reasons, it is important to pay your bills on time and keep your budget manageable. However, we understand this is not always possible and can help you if you are struggling financially.

A good way to take control of your finances and get back on track with the payments that matter the most is to file for bankruptcy. Bankruptcy gives you the ability to either eliminate or seriously reduce most of your debts. But there is an impact on your credit score when you file a case. Here are some things to know about how bankruptcy can affect your credit:

• Your credit will reflect that you have filed a case.
• Once your case is over, your credit will show that you have successfully completed bankruptcy and that certain debts are no longer due.
• The number of points your credit score goes down due to filing bankruptcy is specific to you, not everyone has the same experience and your prior credit history also plays a role.

In most cases the impact on credit is not terrible, and in all likelihood you will be able to get a new loan or an extension of credit not long after your case is finished. We only recommend doing this though if you are capable of making the payments on a new loan, because anything you borrow after your bankruptcy case is over will be due. Debts taken out after bankruptcy are not subject to the bankruptcy discharge, and lenders will expect payment. If you are unable to make the payments, the creditor has all of the same remedies available to them just as if you had not filed bankruptcy. If you have more questions or need to know whether bankruptcy is the right choice for you, call our office today. We can let you know what to expect, and prepare you for what lies ahead.

For more information about how to handle overwhelming debt, contact us at We will help by coming up with solutions that work for you.

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