Credit Score Issues after Bankruptcy
When you file for bankruptcy, one of your many concerns may be how the filing will affect your credit score. The answer is simple — bankruptcy may actually help your credit score because debt is discharged and judgments are avoided.
Your credit score comprises many financial factors. Bankruptcy is just one of them. Bankruptcy could be the right decision for many people living with debt in Pennsylvania. The decision to file is not the only thing to affect your credit score.
The skilled bankruptcy attorneys at Ross & Schnarrs located in Pottstown, Pennsylvania, handle Chapter 7 and Chapter 13 bankruptcies. Contact us today to learn how we can help you get a fresh start.
Discharge of Debt Increases Credit Score
In some situations, filing for bankruptcy may increase your credit score. This is because your credit score is made of many factors, including:
- Timely payments on secured debt
- Total amount of unsecured debt
- Judgments on record
Bankruptcy filing can eliminate the three biggest negative aspects harming your credit score and can help your score rise dramatically. Bankruptcy is only one of more than 100 factors that contribute to your credit score. When your debt is discharged or you establish a repayment plan, you will likely begin to make payments on secured debt. Your judgments will be removed from your record. These changes can lead to a dramatic rise in your credit score.
Credit consolidation companies often discourage you from filing for bankruptcy by alleging that your credit score will take a huge hit. They would rather you consolidate your debt and make payments to them. This is largely a bankruptcy fear tactic. In reality, many people see significant improvements to their credit score. The bottom line is that if you are considering bankruptcy, your credit score should be your last concern.
Recovery Period After Discharge
The long-term impact of filing for either Chapter 7 bankruptcy or Chapter 13 bankruptcy is not disastrous to your credit score either. The length of time you may see an impact on your score depends on how fast you are able to get new credit and make timely payments on the new credit. We will help you evaluate the time it will take you to qualify for credit. For some people, that time is as little as three months, but for others it may be longer.
Contact Ross & Schnarrs Today
Pennsylvania bankruptcy lawyers at Ross & Schnarrs will answer all of your bankruptcy-related questions. We understand that your credit score is important, and will work to explain in greater detail how filing for bankruptcy can affect your credit score. Contact us today.
