Bankruptcy is not an easy way out of debt or a quick fix for financial woes. Following a bankruptcy, you will be ineligible for loans, credit cards and many other types of credit. Some envision the aftermath as tough and possibly not worth it, but individuals experiencing financial trauma should compare the aftermath of filing with the consequences of not filing at all.
Bankruptcy will have a negative effect on your credit report. When filing for Chapter 7 or Chapter 13, the negative mark stays on your report for 10 years. It doesn’t matter why you file or how much debt was discharged. Every bankruptcy is treated the same by the credit reporting agencies. Every bankruptcy is seen as equal when calculating credit scores. It doesn’t matter if you had a high or low credit rating prior to filing. It doesn’t matter if you had a long history of non-payment. The only thing that matters is that you filed for bankruptcy and it will be noted as just that on your report for the designated length of time.
It could be said that bankruptcy is the worst negative record that can possibly end up on a consumer’s credit report. Experts would argue that, while that is true, it also provides you with the single most efficient opportunity to proactively go after a good credit score and a healthy financial life. When your debt is discharged by bankruptcy, you should immediately take action. You can do nothing to erase what has already happened. Negative information on your report prior to filing for bankruptcy is not erased. Your bankruptcy will not be removed for 7-10 years. What you can do is add positive credit activity as soon as possible.
Bankruptcy filers will find that they are unable to obtain consumer credit immediately following the discharge of their debt. Soon after, they’ll also find that there are many opportunities to “rebuild credit.” We recommend obtaining a conservative (low balance, low fee) secured credit card from a reputable source. Use the secured credit card every month and pay it off every month. In this way, you are almost immediately creating a positive credit record to combat the negative that you can do nothing about.
Individuals who carefully monitor spending post-bankruptcy, consistently pay off balances and exhibit timely payment behavior will find that they can qualify for traditional funding within a couple years. Declaring bankruptcy will negatively affect your credit score. How long you allow it to do so is up to you. Consider your options and carefully set in place a plan that will keep you on a financially healthy track.
If you fear the negative affect of bankruptcy on your credit report, get in touch with an expert at Westgate Law today. We can discuss your specific situation in detail and help you pinpoint the answers to all your questions.