Nobody wants to file for bankruptcy, and it’s usually a last resort for those who do. The number one question those considering bankruptcy ask is typically, “Is filing for bankruptcy bad for my credit?” What they’re worried about is the future, of course, since most people need to borrow money for things like a new (or used) car, or other large purchases in life.
The bad news is that filing bankruptcy does have a negative effect on your credit score, but the good news is that your credit isn’t lost forever! Filing for bankruptcy may be the best option if you have limited resources for repaying your debt, and once you’re out of bankruptcy and your finances are back on track you can (and should) begin the process of rebuilding your credit. That means taking steps to build a new credit history with new creditors or with any accounts that survived the bankruptcy process. You’ll be amazed at how soon after bankruptcy new credit card offers begin showing up in your mailbox! Of course, they’ll probably have high interest rates, but the point is to get one and start using it responsibly to reestablish a good credit score as soon as possible.
Bankruptcy stays on your credit report for up to 10 years, but as time passes, it impacts it less and less as you add positive information. It’s entirely possible to return to a good and even an excellent credit score after bankruptcy, but it depends on you and how much effort you put into rebuilding your damaged credit.
While it’s true that filing for bankruptcy will damage your credit report, the same is true of not paying your creditors on time — or at all. Sometimes, filing for bankruptcy is the best decision you can make in the long run. It’ll hurt at first, but in time, the pain will ease and your financial picture will look a lot brighter!
If you’re considering filing for bankruptcy to solve a financial crisis, contact us. We’re Buettner Law Group, bankruptcy specialists in the Twin Cities area, and we’ll fight for your rights and guide you through the process every step of the way.