How bad will personal bankruptcy affect my credit? 13 Answers as of April 16, 2015

Will bankruptcy affect my credit?

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The Law Offices of Ryan F. Beach, PLLC
The Law Offices of Ryan F. Beach, PLLC | Ryan Beach
Here is a link to an article that summarize the impact bankruptcy has on a person's credit:
Answer Applies to: Michigan
Replied: 4/16/2015
Tokarska Law Center
Tokarska Law Center | Kathryn U. Tokarska
Usually yes it effects the credit but depending on your circumstances it could actually IMPROVE your credit scores, yes improve, over time. That's because having unpaid debts in collections, charge offs, judgments, all those things impact your score as well. So depending on how long it will take you to pay off the debt or if you happen to get lucky, don't pay, but no one sues and the stuff falls off the credit report after 7.5 years. Regardless of the score, creditors also consider your debt to income ratio when determining whether to make a loan to you. Between two potential borrowers having the exact same score with one having considerable amount of debt and the other having little to none, I know which I'd prefer to lend to. If you have items in collections, judgments, charge offs - as far as standard mortgage lenders go, they're not likely to give you a mortgage anyway. Whereas, 3 years post bankruptcy I've had clients get a mortgage, of course they had NO additional negative items post bankruptcy and their income was sufficient to afford to make the mortgage payments that they were attempting to get. Typical bankruptcy client is in financial trouble and either cannot afford to make the payments or are only able to make minimum payments if that on some of the debt. Usually making minimum credit card payments means you're on a 37 year repayment plan provided you don't borrow any more. In that type of situation, credit scores take a back seat to other more important issues. Worrying about the credit scores under these circumstances is like worrying about a surgery scar from having a tumor removed. Yes it sucks having a scar. Sure would have been nice not to get cancer and it should would have been nice not to get into too much debt.
Answer Applies to: California
Replied: 4/15/2015
GARCIA & GONZALES, P.C. | Richard N. Gonzales
There is life after bankruptcy! Of course filing BK will adversely affect your credit. But so will slow pays, non-payment, judgments, garnishments, judgment liens, etc. You can rebuild your credit after getting a fresh start. Those other matters enumerated above will haunt you for years! A good BK lawyer will charge you a small fee for a face to face meeting to get all your questions answered.
Answer Applies to: Colorado
Replied: 4/15/2015
Ryan Legal Services, Inc.
Ryan Legal Services, Inc. | Kevin Ryan
A bankruptcy discharge will effectively wipe out all of the negative account information on your credit report which is applied to lower your score. You should discuss with your attorney the possibility of reaffirming a car and/or home loan ( but not a 2nd mortgage ) which will cause the loans to be reported after the discharge and positively affect your credit score so long as the payments are made on time going forward. This "cleansing" of your credit record, combined with reaffirmation of a secured debt or debts ( such as house and car(s)), subject to the advice of legal counsel, can significantly boost a credit score after conclusion of a bankruptcy case and the receipt of the Discharge Order. In some cases where loans such as the above are not reaffirmed in the bankruptcy case, a debtor can apply for a credit card with a small balance and responsibly use the credit so that it stimulates the credit report each month with positive activity. Keep in mind that reaffirmation only applies in the context of a Chapter 7 case. It takes years to recover credit wise if you file under Chapter 13, which requires a payment plan (the cases usually run between 36-60 months, unless 100% of all claims are paid sooner by the Debtor).
Answer Applies to: Ohio
Replied: 4/15/2015
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Yes, it will do that. Generally when people get to my door that is a non-issue because the damage is done. The credit is already bad, OR they have been kitting credit cards and they are about maxed out. Credit scores will plunge when that happens. ("Kitting" means using one card to make the payments, then the next month using another card to make the payments.) If you have a car or house payment after bankruptcy that will help rebuild your credit score.
Answer Applies to: California
Replied: 4/14/2015
    Law Offices of Daniel J Winter
    Law Offices of Daniel J Winter | Daniel J Winter
    It'll be on your credit for up to 10 years, but most people recover within a few years.
    Answer Applies to: Illinois
    Replied: 4/14/2015
    A ch 7 stays on the credit report for 10 years but as a practical matter will not mean that you will be unable to obtain credit. Credit scores should improve after a bankruptcy because the old bills are gone and the new bills will be paid on time.
    Answer Applies to: Minnesota
    Replied: 4/14/2015
    Ronald K. Nims LLC | Ronald K. Nims
    Most people who are ready to file bankruptcy already have bad credit because they have a missed or late payments and some debts have gone to collection or even to court. Bankruptcy actually improves their credit because it gets rid of the old issues. There are some people who have never missed a payment but need to file bankruptcy because their debts are too high. These people currently have can have good credit ratings and filing bankruptcy will lower their score. In either case to rebuild your credit, you need to make all your payments on time after the bankruptcy and your credit rating will be good enough to qualify for regular interest rates or get a mortgage two years after the bankruptcy.
    Answer Applies to: Ohio
    Replied: 4/14/2015
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    You will generally get new credit cards week or so after your case is closed; you are mortgage worthy in 2 years and buying or leasing a car should be within 6 months of your case being closed. Your credit will improve immediately after you are done with your bankruptcy which will be 90 days if there are no problems.
    Answer Applies to: New York
    Replied: 4/14/2015
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    As a general rule, if you have a pretty good credit score now, a bankruptcy will send it down by up to 100 points. As a comparison, if you have 5 accounts that are don?t get paid as required, you lose 10 points for each account every month, which is 50 points per month. In two months, not paying credit obligations is equivalent to bankruptcy. In addition, bankruptcy is a one time hit to your credit score, while settling debts may require month after month of not paying. Pay if you can, but if you cannot pay, file bankruptcy sooner rather than later to prevent massive damage to your credit score.
    Answer Applies to: Nevada
    Replied: 4/14/2015
    Richard B. Jacobson & Associates, LLC | Richard B. Jacobson
    Bankruptcy definitely causes a reduction in your credit score. Exactly how much depends on a complex algorithm which is not public. BUT if you are considering bankruptcy the likelihood is that your credit score has already fallen quite a lot, or is about to do so. It is possible with the advice of a knowledgeable lawyer to rebuild your credit score in about 24 to 30 months. Good Luck.
    Answer Applies to: Wisconsin
    Replied: 4/14/2015
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