Too many people believe that bankruptcy is a bad thing. It has a negative reputation because it implies that times are bad and your finances are probably nonexistent. In reality, bankruptcy is a step in the right direction to get your finances organized and on a track, and it should be viewed in a positive light. It might not be for everyone but there are many options available for those looking to file. If you are considering filing for bankruptcy, be sure to keep in mind the following important questions about how bankruptcy impacts your credit.
Will Bankruptcy Affect My Credit Score?
This answer is a simple one: yes. The impact depends on your credit score prior to filing for bankruptcy, though. If you have a bad credit score (low), filing for bankruptcy will result in only a modest drop in your score. On the other hand, if you have a good credit score (high), a bankruptcy filing will impact it more. You should expect to see a huge drop in your credit score shortly after filing for bankruptcy.
Which Bankruptcy Filing is Better for My Credit: Chapter 13 or Chapter 7?
When it comes to your credit score, filing for either Chapter 13 or Chapter 7 bankruptcy makes no difference. It is important to note that the two types of bankruptcy have their differences. In Chapter 13 bankruptcy you will end up repaying some or all of your debts over a three to five year period. It is possible that a potential creditor might view this choice as a more responsible one, making you a better credit risk in their eyes than someone that files for Chapter 7.
Does Bankruptcy Stay on My Credit Report?
Unfortunately, whichever bankruptcy you filed for will remain on your credit report for up to 10 years. However, if you apply for a loan or life insurance policy higher than $150,000, credit reporting agencies can report your bankruptcy for more than 10 years. The same goes for if you apply for a job with an annual income above $75,000. Even though they have this power, most credit reporting agencies will delete your bankruptcy after the 10 years are up.
Cherry Hill, New Jersey Bankruptcy Attorney Can Help You
When it comes down to it, filing for bankruptcy is meant to help you with your specific situation. If you are unsure about what it can do for you, which chapter to file under, or have other questions regarding the process, you need the assistance of Cherry Hill, New Jersey bankruptcy attorney Joel R. Spivack. He will make sure you meet bankruptcy qualifications and figure out which bankruptcy filing is best for you. All you have to do is schedule a consultation by filling out the online contact form today.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.