Many people are hesitant to even consider filing for bankruptcy due to the impact it can have on their credit score. However, this process has many benefits, as it can help you gain financial freedom. If you’re ready to file for bankruptcy, you must consult a Shelby County, TN bankruptcy attorney to help you through this process, as it can have significant impacts on your credit report. Keep reading to learn more about this process and how long you can expect bankruptcy to affect your credit score.
How Will Bankruptcy Impact My Credit Report?
It’s no secret that filing for bankruptcy can negatively impact your credit score. In order to have debts discharged through bankruptcy, it will remain on your credit report. However, depending on what chapter you file, it may last longer than others.
If you file Chapter 7 bankruptcy, which is the process of liquidating assets to pay off one lump sum of the debts you owe before having the rest forgiven, it will remain on your report for ten years. If you file Chapter 13 bankruptcy, you will create a repayment plan generally lasting three to five years. This will remain on your credit report for seven years.
When you file, your credit score will drop drastically. Generally, the higher your credit score is at the time you file, the more of an impact you will see. You can expect your credit score to suffer for the majority of the time your filing appears on your report. However, there are steps you can take to slowly rebuild your credit before your filing is removed from your report once the allotted time has passed.
How Can I Rebuild My Credit After I File?
Bankruptcy appears on your credit report as a means of informing potential lenders of the fact that you filed. However, you may take additional steps to help rebuild your credit score after filing.
To start rebuilding your credit, you’ll want to ensure you practice good credit habits. You should prioritize paying bills on time and avoid making any purchases you will not be able to pay off on time. It’s also important to regularly check your credit report, to make sure they’re accurate. The last thing you want is to file for bankruptcy only to find your report is inaccurate and the discharged debts are still listed.
It’s essential to understand that filing for bankruptcy does not come without consequences. However, you must know that you need to carefully weigh these pros and cons with the assistance of an experienced attorney before making a decision. At the Arnold Law Firm, our legal team will work to help you make the best decision for your needs. Contact us today to learn how we can guide you through this process.