How Could Filing Bankruptcy Affect My Credit?
Bankruptcy should only be used as a last resort when you have exhausted all other options to fix your debt situation. If you’ve determined there is no other way to pay back your creditors, bankruptcy might be the only choice. Of course, one of the negative aspects of filing bankruptcy is that it can affect your credit. It’s important to understand what this means.
Your credit score can take a hit and decrease anywhere from between 160 to 220 points depending on whether you file Chapter 7 or Chapter 13 bankruptcy. That means if your credit was already good, it can reduce down to only fair or even poor. As a result of this issue, you can find yourself unable to secure a new loan or be approved for a new credit card.
In addition, it’s important to know that when you file bankruptcy, the bankruptcy will remain on your credit report for a period of time. This means that anyone who views your credit report will see the bankruptcy. If you file Chapter 13, the bankruptcy will remain on your credit report for as long as seven years. Additionally, your discharged debts will also remain on it for seven years after they have been discharged. In many cases, discharged debts linger on a credit report far longer than the bankruptcy itself as well.
With Chapter 7 bankruptcy, the bankruptcy will remain on your credit report for a maximum of 10 years. However, any debts that are discharged through this type of bankruptcy disappear from your credit report a few years before the bankruptcy itself. On average, it can take seven years before a discharged debt is gone from a credit report.
The longer a bankruptcy remains on your credit report, the less impact it has on your credit, in general.
If you live in Alabama and have to file bankruptcy, you need to Loris Law Firm to help. The best bankruptcy attorney Mobile Alabama has to offer can assist you every step of the way. Contact the top bankruptcy attorney Mobile Alabama based at the Loris Law Firm at your earliest convenience.