Does Bankruptcy Affect My Credit Score?

Many people don’t learn about a possible bankruptcy case because they have heard that bankruptcy will forever ruin their credit, and they will never get credit again. This is simply not true, however, and in many cases, bankruptcy can improve your overall credit picture. Below is some information about how bankruptcy might affect your credit, and to talk to a Michigan bankruptcy attorney about your specific situation, reach out to our law firm directly. 

Bankruptcy Goes on Your Credit Report

When you complete your bankruptcy case, the record of your filing will go on your credit report and stay there for seven to ten years, depending on whether you filed for Chapter 7 or Chapter 13 bankruptcy. This can be a sign that you have gotten into debt trouble in the past and couldn’t pay your bills, which future creditors will see. However, this doesn’t mean that your credit is destroyed. 

Bankruptcy Might Even Help Your Credit

Many people who file for bankruptcy already have major credit problems. If you are constantly missing payments, defaulted on credit cards, have legal judgments, or other issues, these are all getting reported on your credit. Each negative mark, which can happen every month, will lower your score more and more. 

If you file for bankruptcy, all of these individual negative marks will stop, as most of those debts might be discharged and closed. Instead of many repeated negative marks, you will have one big one – the bankruptcy itself. In some cases, this damages your credit less than the constant late payments or judgments and might even help your future credit score. 

Creditors might also see bankruptcy as a responsible solution to major debt problems. Instead of ignoring collection efforts, you took steps to solve your money issues, which means you were willing to address the problem. Some creditors might view this as a positive step instead of a negative one. 

You Can Rebuild Your Credit

Even if your credit suffers a blow at first after bankruptcy, there are ways to rebuild your score fairly quickly. These might include secured credit cards or other low-risk forms of credit that will still increase your score if you pay on time. After a while, many people with bankruptcies on their credit are able to get car loans, credit cards, and mortgages again. While you are rebuilding your credit, you should be careful to make sure every payment is made on time – otherwise, you could find yourself in the same situation you were in before your bankruptcy. 

Speak with a Michigan Bankruptcy Lawyer Today

At the law office of Karen E. Evangelista, PC, we know that the bankruptcy process and its effects on your future can be confusing. Don’t let worries about your credit score stop you from discussing the bankruptcy process with a Michigan bankruptcy attorney. We can review your situation and let you know if bankruptcy will help your position in the long run or not. Contact us today for a free meeting to learn more about your bankruptcy options.