How Will Bankruptcy Affect My Credit?

How Will Bankruptcy Affect My Credit?

Many credit card companies frighten debtors by telling them that bankruptcy will ruin their credit forever.

In reality, if you have significant debts, filing bankruptcy may actually be the fastest way to improve your credit score. If there is no way to reign in the financial difficulties you are facing, you are probably in a situation where your credit is already being damaged. In many situations that we are addressing for our clients, the only way to start to rebuild your credit is to file for bankruptcy. Don’t put it off. Give us a call now.

At the law firm of Gross & Patterson, LLC, in Pittsburgh, our lawyers are here to help Pennsylvania residents get a fresh financial start. We offer a free initial consultation to answer your questions about rebuilding your credit after filing bankruptcy.

How Long Will a Bankruptcy Remain on My Credit Report?

A bankruptcy filing may remain on your credit report for 10 years. However, bankruptcy does not have the stigma it once had. If you are carrying large credit card balances, are behind on your payments, and are facing issues such as repossessions and foreclosure, your credit score may already be about as low as it can go.

Once you file bankruptcy, and your debt is discharged, from that day forward, you can begin to rebuild your credit. Credit card companies will begin sending you offers for new credit cards almost immediately after you file. The credit card companies know three things:

  • You have filed bankruptcy.
  • Your debt has been discharged.
  • You probably can’t file bankruptcy again for eight years.

One of the big concerns is that you don’t fall prey to these new credit card offers. Initially you will likely be charged a high rate of interest for any new credit cards. However, if you pay off your bills every month, you can rebuild your credit in as little as 16 to 24 months after filing bankruptcy. Your credit score is based on three things:

  • The length of your credit history.
  • Whether you are current on credit card and other payments. (Paying your bills each month when they are due is the fastest way to improve your credit score)
  • How much of your available credit you carry over from one payment period to the next. (The less debt you carry on credit cards, the better for you and your credit score.)