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Bankruptcy and Your Credit

Many people see bankruptcy as the worst possible thing that could affect their credit. They believe once they file, they will never be able to buy a home, finance a car or obtain a credit ever again. While bankruptcy does leave a temporary black mark on your credit file, it will not prevent you from ever obtaining credit again. First of all, think about your current financial position; if you are paying bills late or missing them altogether, your credit score is already suffering. As bills get sent to collections and judgments are issued against you, you will see your credit score rapidly decline, preventing you from obtaining new credit or low interest rates.

With this in mind, bankruptcy does not have a much different effect with regard to your credit file. While most pieces of negative credit typically remain in your credit file for about 7 years, bankruptcy can last a little longer at roughly 10 years. However, shortly after bankruptcy you will see your credit score go up. In fact, some people report being approved for new credit and loans soon after their discharge. 10 years seems like a daunting length, think about how long it would take you to catch up on all your past due bills in order to get back on track. Would it take 5 years? 10 years? Would it ever be possible? This can really give you some perspective on the situation. Bankruptcy can actually help you to get a fresh start and allow you to begin building your credit again.


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