Credit Consequences

Bankruptcy Lawyer in Ogden | Salt Lake City Credit Repair and Credit Consequences

National Association of Consumer Bankruptcy Attorneys How does bankruptcy affect my credit?

Despite contrary counsel from credit counseling services, the fact is bankruptcy is the best remedy to a bad credit score.  Many people see an automatic increase in his or her credit score immediately after receiving a discharge of debts in bankruptcy.  For example, if you have a credit score of 540 before filing, it would not be surprising to see your score automatically jump to 680 after completing your bankruptcy.

Naturally, you will complete your bankruptcy much faster in a Chapter 7 compared to a Chapter 13; so your fastest credit repair will be through a Chapter 7 bankruptcy.  Do not be fooled by salesmen whose only goal is to sell the only product they can sell i.e. credit counseling or consolidation etc. These types of programs force all of your accounts into default first, because this is a precondition under their agreements with the credit card companies to begin a consolidation program.  Also, your accounts will show “late” or in “default” the entire time you are on the program.  This is done so you will not be credit worthy throughout the program lest you incur more debt.

To put it simply, your credit score will not repair during this time, which can be up to 10 years!

Will I be able to obtain credit after filing bankruptcy?

One of the most interesting, but counter-intuitive facts about bankruptcy is that a person that recently obtained a discharge in bankruptcy becomes one of the best candidates for credit in the entire economy.  A few reasons contribute to this.  First, your credit score increases dramatically to an average 680 (approx).  Second, you have no debt, so your debt-to-income will likely be prime to get new loans!!! Third, you cannot file bankruptcy for another 8 years, if you file a Chapter 7 bankruptcy.

The only real “hit” to your credit for filing bankruptcy will be that it will appear on your credit report.  Please note that this will not affect your credit score that much.  However, many lending underwriters will not lend to you merely because you have a bankruptcy on your credit report-these types of lenders are very uncommon, however. Especially today, a huge amount of the population is filing for bankruptcy so even those scant strict lenders are eroding their stringent underwriting guidelines.

Can I get the bankruptcy of my credit report?

The answer to that questions is yes, but it will likely take a year at the earliest.  There are some good credit repair companies that can make this happen for you if it is a concern.

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