For those struggling with debt, filing for bankruptcy is necessary to achieve much-needed financial relief. One of the biggest concerns people often have, however, is the impact a Chapter 7 bankruptcy will have on their credit score. The fact is that although a bankruptcy will affect your credit, your score is likely already in bad shape given that you cannot pay off your debts. Filing for a Chapter 7 bankruptcy gives you the opportunity to start anew, wiping out most of your unsecured debts, so you can begin rebuilding your credit score without an insurmountable sum of debt looming over you.
How Long is Chapter 7 Bankruptcy on Your Credit Report?
After you successfully complete a Chapter 7 bankruptcy, you can expect it to remain on your credit report up to 10 years. However, since Chapter 7 discharges most debts within a few months of filing, you can expect those to disappear from your credit report sooner, typically after 7 years.
As time passes, your bankruptcy and discharged debts will affect your credit score less and less. Once you realize you are in a situation where a bankruptcy might be the only answer, it is imperative to act quickly and hire a bankruptcy attorney to begin the process. Putting it off will only worsen your credit score and make recovering from this financial predicament take longer.
Managing Your Credit in the Aftermath
After successfully filing for a Chapter 7 bankruptcy, it is crucial to begin the process of rebuilding your credit score. This includes regularly checking your credit score and reestablishing your credit.
Here are some helpful tips to reestablish your credit after a Chapter 7 bankruptcy:
- If you obtain a secured credit card, you will be required to give the company a lump sum of money that will be kept as collateral. Since these types of cards do not require the creditor to take on any risks, they are relatively easier to qualify for. Therefore, in spite of your poor credit, you will still be able to improve your score by signing up for one of these cards. Make sure you fully understand any fees associated with using your secured credit card.
- Unlike most other credit cards, store credit cards are also easier to qualify for. However, they come with higher interest rates and fees, so use it wisely to avoid getting into financial hot water again.
- Do you need to buy a car? Getting a car loan is not as difficult as obtaining other types of loans, particularly when you can offer a down payment.
Although credit cards are an essential part of rebuilding your credit, make sure you always do your homework on the cards or loans you sign up for and pay back your debts on time. You should also limit the number of credit cards you sign up for and keep your oldest accounts alive to preserve the length of your credit history.
Speak with an Experienced Bankruptcy Attorney Today!
If you are about to begin the process of filing for bankruptcy, reach out to the skilled legal team at the Law Offices of Marshall D. Schultz. We have over 45 years of experience and will help ensure you are able to successfully file for a Chapter 7 bankruptcy, so you can begin working toward a brighter financial future.
Contact our team today at (888) 822-6730 to schedule a free case review.