Filing for Bankruptcy Can Positively Impact Your Credit
If you’re struggling to pay your bills, whether because you’ve lost your job, gone through a divorce, or incurred substantial unreimbursed medical expenses (the most common cause of a bankruptcy filing), you may be considering bankruptcy. Though a bankruptcy can help you get a fresh start, and put a halt to the incessant phone calls and letters from creditors, you might fear that filing for protection will make it more difficult for you to secure credit. That’s not necessarily true.
Many Potential Creditors View Bankruptcy Favorably
When a potential creditor is considering your application, the fact that you’ve filed for bankruptcy protection can indicate that you recognized the problem and took specific steps to remedy the situation. Instead of making matters worse by borrowing money (and adding to your debt load) or falling even further behind, you sought the help afforded by bankruptcy law. In addition, whether you qualify to discharge debts in Chapter 7 or must restructure your obligations through Chapter 13, you should end up with more discretionary income, making it more likely that you’ll be able to repay any credit extended.
Your Credit Score Will Likely Go Up Within Six Months
There’s no way around it—your credit score will take a hit when you file for bankruptcy protection. It tends to be short-lived, though, provided you honor your commitments in the bankruptcy proceeding.
A recent study by the Federal Reserve Bank of Philadelphia supports this conclusion and shows that individuals who file Chapter 7 or Chapter 13 see increased credit scores. After six months, the average Equifax credit score for Chapter 7 filers rose from 540 to 620. Chapter 13 petitioners saw an average rise from 535 to 610 over the same period of time.
Contact the Cintron Firm
At the Cintron Firm, LLC, we offer more than 14 years of experience to people in New Jersey facing a broad array of legal challenges. Attorney Mark Cintron has worked as a prosecutor and has extensive courtroom experience, so he’s always ready, willing and able to protect your interests before a judge or jury. We are currently available to talk with you by phone, text message or online videoconference. Contact our office online or call us at 201-791-1333 or 917-494-5695 to set up an appointment.