Bankruptcy and Your Credit

One of the least desirable aspects of filing bankruptcy is that it will remain on your credit report for ten years. Thinking you will not be able to obtain credit for that length of time can be a scary thought.

If you are delinquent on your debt and are missing payments, these negative marks can remain on your report for seven years. They are also making it challenging to obtain new credit. Filing bankruptcy is unlikely to make your credit much worse.

Ignoring your Debt

One of the differences in filing bankruptcy and just ignoring our debt and waiting for the seven years for it to fall off your credit report is that when you file bankruptcy, you are no longer legally responsible for that debt. The creditors will stop calling, and all attempts to collect on the debt will stop. Wage garnishments, judgments, liens will also be eliminated in bankruptcy. Whereas waiting it out, you could find yourself being sued by the creditor to collect on your debt.

New Credit

You may be surprised to see offers of credit soon after you file bankruptcy. These loans usually come with high-interest rates. These lenders are counting on your belief you will not be able to get credit anywhere else. If you prove your creditworthiness by paying your bills on time and do not acquire more debt, lenders may give you a chance long before the ten years are over.

Another aspect lenders look at favorably is that since your debt was eliminated in bankruptcy, you will have more income to pay the bill. Also, they know you will not be able to obtain another Chapter 7 discharge for eight years.

If you are behind in your payments and need financial relief, contact a Rio Grande bankruptcy attorney.