Concern about future credit is a primary concern of many people who file for bankruptcy. People wonder if their credit score will drop dramatically, and if it will stay that way forever or if credit can be rebuilt.
Regarding this issue, the Supreme Court said in a bankruptcy case in 1934 that “[bankruptcy] gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” This means that people needing bankruptcy relief should be able to rebuild their credit and their financial stability eventually.
At Mariano & Coiro, P.C., we have been helping clients with bankruptcy for over 35 years. We know what to expect and how to best mitigate any issues that may arise. With that background, we’re able to inform you on what you may expect after bankruptcy with regard to your credit.
How low will my credit score be after bankruptcy?
In most cases, your credit score will be lower, by more than 200 points, after filing for bankruptcy. However, the specific amount your score decreases is dependent on the severity of the bankruptcy. It will be adjusted depending on the proportion of negative accounts to positive accounts on the credit report and how much debt was discharged as a result of the bankruptcy.
Unfortunately, any positive payment history or lack of negative information on the credit report before the bankruptcy filing does not factor into this new credit score adjustment.
Will bankruptcy ruin my credit forever?
At first, with a dramatically lowered credit score, the situation can look dismal. However, here are some things to consider when looking to rebuild your credit after filing for bankruptcy:
- The Bankruptcy filing will remain on your credit report for up to ten years, and the impact will lessen with time
- New credit, on-time payments and low credit card utilization will increase your credit score
- Credit cards, passbook loans and CD or credit-builder loans can build up your credit again
- Paying your post-bankruptcy obligations (such as your rent, car payment, or nay new credit cards) in a timely manner will also hasten the rebuilding of your credit, as your most recent credit history outweighs any of your pre-bankruptcy problems.
Bankruptcy can seem like the end, but it doesn’t need to be. Instead, it can be a new and better beginning for you. The attorneys at Mariano & Coiro, P.C. are here to help you navigate the complex world of bankruptcy and credit matters. Contact us through our website or call 732-860-7620 to schedule a FREE and CONFIDENTIAL consultation with our attorneys who are knowledgeable and experienced in bankruptcy law.