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Your Credit Rating and Bankruptcy

There is a prevalent myth out there that bankruptcy is bad, really bad.

Not to say that bankruptcy is good (of course it is not) but how bad is it really?

Your Credit Rating and BankruptcyThe truth is that once you file bankruptcy, it can remain on your credit report for up to 7 years and 10 years in certain instances.

According to FreeCreditScore:

Chapter 13 bankruptcy will remain on the credit report for seven years from the filing date. Under Chapter 7 bankruptcy, a person does not repay any of the debts included in the filing. Chapter 7 bankruptcy remains on the credit report for ten years from the filing date.”

But with a bankruptcy you get to start over.

With a clean slate.

Begin again.

If you have bad credit and you can’t pay your bills, the negative credit will stay on your report for 7 years from the date of first delinquency. You probably will not be able to get credit while you are showing the negative items on your report. Your credit score will probably not go up much until you pay everything off and not much even then.

But with a bankruptcy, you can begin again, perhaps with secured credit card or some type of loan for people with bad credit and your credit score will start to increase.

You can get credit after a bankruptcy, and if your credit was really bad you may not have been able to get it before anyways.

In fact, if your credit score is really low because of late payments, charge-offs and more it is possible that your credit score will actually increase by filing bankruptcy. Of course, only if it is really low though.

But the truth is that if you can’t pay your bills, bankruptcy is often the best option even if the lenders and others say it is financial suicide.

If you can’t pay your bills it is financial suicide not to file bankruptcy. I’m not saying that everyone should go out there and file for bankruptcy, but in some cases you have no other choice.

Would you ever file for bankruptcy? Why or why not?

If you are interested in credit repair, there are professionals out there who will work towards improving your credit so that you can get approved for loans, receive lower interest rates (and save thousands of dollars), and more. CreditRepair.com will help you create a game plan to improve your credit score, they will contact credit companies directly on their own, they will communicate with the credit bureaus to work towards making a change, and they provide an online dashboard that will help you monitor everything that is going on. It is all very affordable and will most likely save you thousands in interest fees and late charges.

 

Image via Flickr by andrewbain

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