One reason people avoid filing for bankruptcy is that they fear the credit damage that comes after filing. Credit scores are important when trying to secure a loan for big purchases like a home or a car, and if you have future plans to make a big purchase you may worry about what filing for bankruptcy will do to your credit. The big question isn’t whether or not bankruptcy will ruin your credit but whether or not you will have damaged credit if you don’t file for bankruptcy. A bankruptcy lawyer in Salt Lake City can help you determine if bankruptcy is the right path for your debt relief or if you should pursue a different path.
How Bad Does a Bankruptcy Ruin Your Credit?
The extreme to which a bankruptcy filing will ruin your credit is dependent upon your current credit score. If you’ve worked hard to build a good credit rating, then expect your score to take a nosedive after you file for bankruptcy. If you have a mediocre or poor credit score, you may not notice too much of a difference after you file. The bankruptcy court does not consider your current credit rating when making a decision, and credit agencies do not care if you have a good rating or not if you file for bankruptcy.
The good news is that a bankruptcy doesn’t stay on your credit report forever. Your bankruptcy lawyer in Salt Lake City can give you a good idea of how long your bankruptcy will follow you, but most creditors will eliminate the bankruptcy after a decade.
Rebuilding Your Credit after Bankruptcy
Filing for bankruptcy doesn’t mean that you have to wait ten years before you start to rebuild your credit. Creditors look at more than just your bankruptcy filing when determine your FICO score. If you manage to pay your future bills on time, don’t apply for too much new credit, and the length of time you’ve been building a credit history. All of these work together to create your credit score, and you can begin rebuilding this score right away. Your bankruptcy lawyer in Salt Lake City can give you ideas to help you rebuild your credit score and bounce back after bankruptcy.
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