Having a good credit score prior to filing for bankruptcy means that your credit score could be heavily affected after you file. On the other hand, if you have a poor credit history on various accounts and you have a high debt-to-asset ratio, this means your credit rating is already in the red. Fortunately, if you file for bankruptcy, your scores may not be affected that much and could very possibly improve quickly over time.
How filing for bankruptcy will impact your credit score will depend mostly on your credit rating before filing. There’s simply no way to know exactly how a bankruptcy will affect your credit score. With this in mind, it’s in your best interest to discuss your case with a seasoned South Carolina bankruptcy attorney to get legal advice tailored to your specific situation.
Will Filing for Bankruptcy Ruin My Credit Score?
Not necessarily. Bankruptcy will remain on credit reports for seven to 10 years and may cause your credit score to drop by 100 to 200 points. On the other hand, even though it may get worse before it gets better, credit scores will usually improve at a much faster pace after a bankruptcy than if you do nothing at all and have lingering debt.
Federal law provides bankruptcy protection for a crucial reason. Usually, it is the most suitable option for honest but unlucky debtors who are facing impossible financial difficulties. Many consumer bankruptcies are caused by incidents like unanticipated medical emergencies or job loss. For these people, filing for bankruptcy is the best option to help them stabilize their financial status.
In addition, bankruptcy is an incredibly strong legal procedure that can prevent repossessions, foreclosures, collection lawsuits, and garnishments, among others. Nearly anyone considering bankruptcy is already overwhelmed with debt. This means that their credit score is already very poor, and bankruptcy can help them manage their credit and get back on an upward credit score trajectory.
Bankruptcy is not the best solution for all financial problems, and it shouldn’t be. However, it can be extremely beneficial when necessary. In this light, to find out if filing for bankruptcy is right for you, seek help from a South Carolina bankruptcy attorney.
Improving Your Credit Score After a Bankruptcy
Although bankruptcy stays on your credit history for seven years or more, you can begin improving your credit immediately. Credit bureaus consider various factors when they calculate credit scores:
- Payment history, including whether you have a bankruptcy on record or pay your bills on time
- The credit history’s length
- Any unpaid debt
- Whether the person has applied for new credit and how much
You may improve your credit following bankruptcy by paying your expenses on schedule. Maintain a low debt load, particularly in comparison to your available credit. Once you are prepared, apply for a credit card, use your credit wisely, and pay the bill completely each month.
Get Legal Advice From Our Seasoned South Carolina Bankruptcy Attorney
Overall, while bankruptcy may have an impact on your credit, it will not ruin it forever. You can and should obtain credit again. Making smart financial decisions and getting professional advice when required can help improve your creditworthiness over time and stabilize your financial situation. For more information on filing for bankruptcy, contact our South Carolina bankruptcy attorney at Reed Law Firm. Reach us online or call 803-726-4888 to book your free consultation with our South Carolina bankruptcy attorney.
