Does bankruptcy hurt my credit? This is a question many people ask when they are considering filing a Chapter 7 bankruptcy for debt relief. You may be afraid of filing for bankruptcy for fear of what it might do to you credit report. The truth is, if you are in the financial position where you need bankruptcy relief, you credit report is likely already hurt by all the debts you may owe now. Bankruptcy can actually help your credit.
Consider what is a credit report is. Why is it important to have good credit? Having a good credit report shows potential lenders that you are a good credit risk. Lenders want to know that if they give you a loan, such as a car loan, mortgage, or credit card, that you are able to afford the payments to pay the money back. If you are in the position where you need bankruptcy relief, you likely cannot afford the debt you already have, and cannot take on more debt. Smart lenders can see this from looking at your credit report and probably won’t give you a loan because you owe too much debt already.
Bankruptcy can help your credit
When lenders see too much debt on your credit report, they may not want to grant you a loan because they know you can use bankruptcy relief to avoid paying it back. However, when a lender sees a Chapter 7 bankruptcy on your credit report, they know that you cannot file another Chapter 7 bankruptcy for the next eight years. So, they may think you would be a good credit risk. After Chapter 7, you can rebuild your credit score. You will have a fresh start to get good credit by making your payments on time for any new loans you get and establish yourself as a good credit risk.
After you get Chapter 7 bankruptcy relief, your credit report will show that all your unsecured debts are gone. Lenders will see that you don’t owe any credit cards, medical bills, negative bank balances, or other unsecured debts. Therefore, lenders will know that you actually can afford the payments on a new loan, and they may be more likely to grant you a loan because you would be debt free after Chapter 7 bankruptcy relief.
Take advantage of Chapter 7 bankruptcy relief to regain your financial freedom.
If you need debt relief or have questions about Chapter 7 bankruptcy relief, contact us at Starks Law P.C. for a free consultation with an attorney. We listen to the needs and goals of every client and create a legal strategy tailored to that person and their case. We do not believe in the 'one size fits all' legal strategy employed by other firms. Every case is unique and we plan accordingly.
Representation from Starks Law begins with a simple phone call. We will review the circumstances surrounding your unique situation. After assessing the details, we will form an action plan tailored specifically for your case and goals. Additionally, we will do our best to answer any questions you may have so that you can make a fully informed decision on how to proceed.