Many people worry that if they file bankruptcy they will ruin their credit. It is true that a bankruptcy will remain on your credit for up to 10 years. However, the truth is, if you are considering bankruptcy your credit is most likely not very good. A lot of money owed to many creditors can bring down your credit score because you are considered a high credit risk. Additionally, paying creditors late or not at all will also lead to a low credit score and possibly lawsuits from your creditors.
You can rebuild your credit score after filing bankruptcy. The first step is to ensure that all accounts included in your bankruptcy show that they were included in the bankruptcy. This should be on your credit report about six months after your bankruptcy discharge. Remember, any errors on your credit report can affect your credit score. The second step to rebuilding your credit score after a bankruptcy is to start using credit wisely. You should start with secured cards, which gives you a limit equal to the amount in your account. Try not to charge more than 30% of your credit limit. Pay off your credit card at the end of the month. Installment loans also help rebuild your credit, such as car loans, student loans, and mortgages. Just make sure you can afford the car payment and mortgage payment. Don’t be surprised at the higher interest rate you will receive at first due to your bankruptcy filing. In time though, after rebuilding your credit, you will begin to receive lower interest rates.
So if you are considering filing bankruptcy and you are paying bills late or not at all, chances are your credit is not good. After filing bankruptcy most people are a better credit risk because they no longer owe debt to many creditors. Of course the creditors want you to think otherwise. Don’t be fooled, in most cases bankruptcy provides a fresh start.
Last Updated on April 18, 2017 by The Orlando Law Group