How Does Bankruptcy Affect Your Credit Score?
When it comes to your financial future, it is important for you to do what is necessary to ensure that your credit score remains in decent shape. Unfortunately, the realities of life – and a struggling economy – can sometimes get in the way of your aspirations for a good credit score. If you are finding it difficult to pay your bills or generally manage your finances, bankruptcy may be your best option. But what will filing bankruptcy do to your credit score?
Many people are reluctant to file for bankruptcy because they are concerned about what kind of damage it will do to their credit scores. The truth is that bankruptcy will negatively affect your credit score – after all, the ability to promptly pay debts is one of the most important factors in a credit rating – but the damage does not have to be permanent. There are certain things you can do after filing bankruptcy to ensure that your credit does not take a devastating hit:
- Report the Bankruptcy: In order for your credit score to start rebounding after bankruptcy, you need the credit reporting agencies to be aware that you filed for bankruptcy in the first place. The process of rebuilding your credit takes time, so you want to start the process as soon as possible.
- Start Rebuilding Your Credit Immediately: When reestablishing a positive credit history, it is important to show that you are responsible and committed to paying off future debts in a prompt fashion. So get a credit card – a secured credit card backed by a bank may be the best way to go here – and make on-time payments.
- Get the Bankruptcy Off Your Credit Report When Allowed: Remember that a bankruptcy will only remain on your credit report for 10 years. Once that time period has passed, an experienced bankruptcy attorney can help you make sure that the major credit reporting agencies remove the bankruptcy from your credit report.
This article should not be taken as legal advice. If you’re considering bankruptcy or another legal debt relief option, you need to consult an attorney for guidance. If you’re in New Jersey and seeking legal assistance, we can help you.
Brenner Spiller & Archer, LLP is a New Jersey law firm that is dedicated to helping families find relief from the burden of debt and other financial woes. For more than 35 years, our bankruptcy lawyers have provided effective guidance on all debt relief matters to clients throughout Central and South Jersey.