Effect of Bankruptcy on Credit
Whittier Bankruptcy and Debt Relief Attorney
One of the most common questions people ask about bankruptcy is, “What will it do to my credit rating?” It is an understandable concern. However, if you are behind on your mortgage or car payments, or if you have not been paying your bills, your credit rating may already be suffering. In fact, most of our clients find that a bankruptcy discharge actually improves their credit score.
To find out if bankruptcy is right for you, call the Law Offices of Nicholas Gebelt. We have been helping people decide whether to file for bankruptcy for many years. Attorney Gebelt is a former mathematics professor who will clearly explain all of your options. When you have the necessary information, you can make an educated choice.
How Will Bankruptcy Affect You?
While bankruptcy remains on your credit record for ten years, if you’ve filed a Chapter 7, and seven years, if you’ve filed a Chapter 13, it also has some benefits. One of the most important benefits is the automatic stay. This prevents creditors from pursuing any collection activities against you during the bankruptcy process. They will not be allowed to garnish your wages, repossess your vehicle, or foreclose on your home while the stay is in effect.
If you file for Chapter 7 bankruptcy, many of your debts will be eliminated. Although you may have to give up some nonexempt assets, you will be in better financial shape after the bankruptcy process.
Bankruptcy is extremely common and does not have the negative stigma many people are afraid of. In fact, people who file for bankruptcy often receive offers of credit after their debts have been discharged. There are two primary reasons for this: First, once the debts have been discharged, your future income is freed up to pay any new debts you incur. Second, there are limits on how frequently you can file for bankruptcy protection. For example, if you have gone through a previous Chapter 7 bankruptcy, you must wait eight years from the filing date of that bankruptcy before you can file for Chapter 7 again. Since the creditors know this fact, they will be willing to extend credit and lend you money. Initially, the terms will be a bit onerous. However, this is a temporary problem. We will give you information on how to effectively rebuild your credit after bankruptcy.
We can also help you take steps to rebuild your credit after bankruptcy. If you would like more information about the effect of bankruptcy on credit ratings, please call us now.
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