How Does Filing For Bankruptcy Affect Your Credit Score?

Your credit score helps to indicate your reliability as a borrower to lenders, so having a higher credit score can make it easier to get a mortgage loan, a car loan, a credit card, etc. Filing for bankruptcy is going to affect your credit score, so it is very important to know how this works.

Here at Goldman & Beslow, LLC Attorneys At Law, our experienced lawyers can help. We have provided bankruptcy services in New Jersey for over 40 years. Attorney Mark Goldman is known for fighting for the rights of his clients. We also offer free initial consultations.

What Happens To My Credit Score After Bankruptcy?

If you file for bankruptcy, your credit score is going to decrease. However, you are also clearing up debt, so you will stop missing payments – which is another thing that negatively impacts your credit score. As such, bankruptcy is just the first step toward credit repair. Your score may initially decline, but you can create a positive financial future and rebuild that credit score over time.

Many people find that the negative impact of bankruptcy on their credit is negligible compared to the long-term consequences of debt that continues to pile up and bills that continue to go unpaid. Once your bankruptcy is discharged, there is an entire industry that exists to help people rebuild their credit through the careful use of secured cards, auto loans and more. Eventually, this can help you qualify for traditional credit cards, mortgage loans and much more.

Are Chapter 7 And Chapter 13 Bankruptcies Different?

Yes. Chapter 7 is called a “liquidation” bankruptcy. You must meet an income test to qualify for Chapter 7, and you are required to turn over any nonexempt assets to the court (if you have any). However, the entire process is over in a matter of months and the vast majority of your debts can be eliminated.

Chapter 13 is called a “debt reorganization plan,” under which your debts are consolidated. You are then required to make payments for three to five years, after which any qualified debts will be discharged.

The Importance Of Budgeting During And After Bankruptcy

Finally, it is crucial to make a budget after you file for bankruptcy. Making wise financial decisions moving forward helps to increase your score and create a positive financial future.

Call For A Free Consultation

To set up a free consultation with a New Jersey bankruptcy attorney with 40-plus years of experience, dial 973-414-8069 or use the online contact form today.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.