It is common for individuals who are considering filing for bankruptcy to worry about the effect it might have on their credit score. Continue reading to learn how bankruptcy might affect your credit. If you have any further questions, do not hesitate to reach out to our experienced bankruptcy attorney. We would be happy to walk you through the process ahead. Give our firm a call to learn more about our services and how we can assist you.
How will bankruptcy affect my credit score?
If your debt-to-asset ratio is high before you file, filing for bankruptcy may make your score take a dip, but it shouldn’t affect your credit much more than that. However, it is important to know that if your credit is good before you file for bankruptcy, your score may take a much bigger hit after you chose to file. It is important to be prepared for your credit to see a huge drop in score immediately following your filing.
Will it matter if I file for Chapter 13 or 7?
Some creditors might view filing for Chapter 13 as a more responsible route and a better credit risk than filing for Chapter 7. However, this is the only difference to note regarding filing for one chapter over the other. Whether you file for Chapter 13 or Chapter 7 bankruptcy will make no difference on the effect you will see on your credit score.
How long can I expect bankruptcy to stay on my credit report?
Filing for Chapter 13 or Chapter 7 bankruptcy will appear on your credit report for up to 10 years. Credit reporting agencies can report your bankruptcy for longer than 10 years if you apply for a loan or life insurance policy in an amount great than $150,000. This can occur also if you apply for a job with an annual income greater than $75,000.
Can bankruptcy improve credit right away?
The short answer is, no, bankruptcy will not immediately improve your credit score. However, it can be the quickest way to better your credit down the line. If you are behind on payments or have accounts in collection, bankruptcy can help you get back on your feet by getting rid of many types of debts and providing you with a fresh start financially. This can assist you in making loan and credit payments on time which will help you to rebuild your credit.
Contact our experienced New York firm
Bankruptcy, for many people, is a frightening endeavor. Fortunately, with the help of an experienced attorney, it does not have to be. If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options. We will have your back every step of the way.