One of the biggest concerns we hear from people considering bankruptcy in Tulsa is: “What will bankruptcy do to my credit?”
Maybe surprisingly, bankruptcy will usually improve your credit score. That’s because you don’t owe the debt you used to owe and lenders are more willing to loan money knowing you don’t have the previous debt and you cannot file a chapter 7 bankruptcy again for several years.
Most people can get a vehicle loan immediately after filing bankruptcy. And the government financing programs usually require only 2 years after bankruptcy filing to qualify for a new mortgage.
But for someone already struggling with debt, the more important question may be whether bankruptcy provides an opportunity to begin rebuilding.
Will Filing Bankruptcy Destroy My Credit?
If you’re considering bankruptcy, your credit may already have been affected by:
- Late credit card payments
- Collection accounts
- Medical bills
- Charge-offs
- Lawsuits
- Judgments
- Repossessions
- High credit utilization
Filing bankruptcy doesn’t erase your credit history, but it may address many of the debts preventing you from moving forward financially.
How Soon Can I Rebuild Credit After Chapter 7?
Credit rebuilding can begin after bankruptcy.
Steps may include paying all new obligations on time, maintaining reasonable credit balances, checking credit reports for errors and using new credit cautiously.
Many consumers are surprised to learn that receiving a bankruptcy discharge doesn’t mean they will be unable to obtain credit for years.
How Long Does Bankruptcy Stay on My Credit Report?
Bankruptcy can remain on your credit report for 10 years. But the more important thing to know is not what’s on your credit report but what is your score!
The length of time bankruptcy appears on your credit report is not the same as the length of time it takes to rebuild credit.
Credit scores can change as your financial circumstances change.
Is Avoiding Bankruptcy Better for My Credit?
Not necessarily.
Continuing to miss payments while balances, interest and collection accounts increase may also damage your credit.
The decision to file bankruptcy should therefore involve more than your current credit score.
If debt is preventing you from moving forward financially, Brown Law Firm can help you evaluate your options. Talk with a Tulsa bankruptcy attorney about whether Chapter 7 or Chapter 13 could give you the opportunity for a financial fresh start.
