When people think of bankruptcy and credit scores, the initial impression is that a bankruptcy will have a significant impact on your credit score. This is the most common perspective of a bankruptcy. If you have been late on payments and have an unmanageable amount of debt and payments, your credit score may have already been negatively impacted. Bankruptcy may adversely affect your credit score even further, but the difference may be negligible if your credit score is already low. If you work with a debt consolidation company, they may help resolve some debt issues, but if there are any accounts left over that are not being paid, your credit score is still impacted negatively. Debt consolidation companies will never guarantee that all the debt will be resolved.
So, how can bankruptcy help your credit score? Immediately after a bankruptcy is complete, you will no longer have any debt that can continue to impact your credit. In a Chapter 7, all of your unsecured debt will be completely wiped out. The bankruptcy stops all collections activities and will halt all of the activity that is adversely impacting your credit. At this point, you will have the opportunity to improve your credit. As time passes and credit is closely monitored and managed, your credit score will start to improve. The pattern will turn around from your credit score going lower and lower, to a pattern of improvement. It will start to get higher and higher. Your income will now be yours to manage instead of paying off more interest and payments to the banks. Within a short period of time, you will get more and more credit offers from banks because your profile is now a favorable profile to them.
If you are interested in finding out more information on how we can help you and your family, contact us at 855 257-7671 to schedule an appointment to speak with an attorney. Our office locations in Orange County and Inland Empire can be found on our contact page.
