How Will Filing for Bankruptcy Affect My Credit

bad credit storeIt’s normal to wonder what will happen to your credit if you open a bankruptcy Mobile AL case and succeed with it. You must understand that you are telling creditors and the courts something when you file for bankruptcy with a bankruptcy attorney Baldwin County specialist. You tell them that you are unable to pay all or part of the money you owe for various things. Therefore, the process will affect your credit score in some way. Here is some additional information about it.
Types of Bankruptcy
There are several types of bankruptcy. The two most common types of bankruptcy for individuals are Chapter 7 and Chapter 13. The main difference between a Chapter 7 bankruptcy and a Chapter 13 is the Chapter 13 will require you and your bankruptcy attorney Mobile Alabama professional to develop a repayment plan to present to your creditors. Usually, you’ll have to file for Chapter 13 if the attorney checks your qualifications and finds that you have enough money to repay some of your debts. The means test is one of the tests that will determine whether you qualify for Chapter 7.
Chapter 7 bankruptcy will usually alleviate the bills you owe. Only certain bills such as student loans cannot be eliminated through Chapter 7 bankruptcy. Both types of bankruptcy will affect your credit score the same way, as the credit system sees no difference in them. Therefore, it will be best for you to talk to your attorney about which chapter you can file and proceed with his or her recommendations.
Credit Score Changes
Your score is going to change after you get your bankruptcy approval. How much it changes will depend on what your score was beforehand. You’ll see a larger fall if you had good or fair credit than you will if you had bad credit. For example, your “good” credit score could drop 200 points, whereas you might only lose 50 points if your score was already in the lower levels. The good news is that your bankruptcy will lose its severity over time. It may be rough for you for the first two years. However, many creditors offer second chances to people who have filed bankruptcies. You may be able to obtain a credit card that can help you get your score back up.
Length of Time Bankruptcy Stays on the Report
Under normal circumstances, the max time a bankruptcy stays on your report is 10 years. However, it can stay on your report longer under other circumstances. Bankruptcy Mobile AL status is not something you can have deleted like many other negative records. It will stick with you for quite some time. However, it will lose its potency over time.
What You Can Do to Build Credit
It may be difficult at first after you gain approval with the help of your Alabama bankruptcy lawyer. Some creditors may be leery of lending to you for the first two to three years. Over time, you will come across a situation that allows you another chance to rebuild your credit. You may have to obtain a secured credit card and pay on it every month until your score grows and lenders have more faith in your ability to pay.
How to Get Help With Bankruptcy
It’s best to schedule a consultation with a bankruptcy attorney Selma professional such as the ones at Loris Law Firm. This person can take an in-depth review of your financial profiles and put you through the means test to determine if you qualify for bankruptcy chapter 7 Mobile AL or Chapter 13 bankruptcy. You may qualify for one of the two. If that’s the case, you can hire the AL mobile attorneys to assist you in ensuring that your process goes smoothly.