Exploring the possibility of filing for bankruptcy can be a path filled with worry and hesitation, especially when it comes to the aspect of credit. Will your credit score be ruined forever? Does it mean you won’t be able to get a loan? How will it affect your future?
How Bankruptcy Will Affect Your Score
There is no sugarcoating the negative impact that a bankruptcy has on your credit. If your credit is good before you file for bankruptcy, which is sometimes the case, your score will definitely take a hit. On the flipside, if you’ve incurred a great amount of debt and are delinquent on all of your payments, your score won’t take that big of a dive because it’s probably already pretty low.
How Long Your Credit Will Be Affected
Depending on the type of bankruptcy you file for, it can stay on your public record either 7 or 10 years. When it comes to Chapter 13 bankruptcy, which allows you to pay back part of your debt, it will only stay on your record for 7 years. Chapter 7 bankruptcy, in which most debt is discharged, will stay on your record for 10 years.
No, Your Credit Won’t Be Ruined Forever
In fact, your credit score restoration will begin right after filing for bankruptcy because you won’t have any debt. While you won’t be able to get credit on favorable terms, you can begin rebuilding your credit by applying for a secured loan or credit card and paying them on time. On average, consumers are able to seek normal credit after just two years and have a chance at purchasing a home.Bankruptcy is an event that will change your life, but it doesn’t have to ruin you. Contact our Northbrook bankruptcy attorneys for a free consultation and we will come up with a plan that works for you.