Due to a lot of incorrect information out there, bankruptcy is often seen as a financial failure that delivers a permanent and lasting blow to your credit score. The reality is, if you find yourself in a serious financial crisis, chances are, your credit score has already been damaged and may be low due to a history of late payments or excess debt. In this situation, bankruptcy can actually be a responsible financial choice that can get you back on the path toward a better and more stable financial future.
A Drop in Your Score
When you decide to file for bankruptcy, it is likely going to impact your credit score in a negative way. If your score was higher, you may see a more significant decline. If your score was already very low, most of the damage to your score will have already been done and a bankruptcy won’t have as much of an impact.
What most people are concerned about is the fact that bankruptcy can show up on their credit report for 10 years. While this is true, a bankruptcy also helps to wipe out your debts or establish a debt repayment plan, which can put you in a position to get new credit and improve your score. Successful management of your money after your bankruptcy can show creditors that even though bankruptcy appears on your report, you are now in a good financial place and ready to properly handle credit.
Post-Bankruptcy Credit Score Improvement
Bankruptcy can truly be the first step a debtor takes to improve their credit score. Even with a likely decline during the process, it’s important to remember that a decline in credit score can be temporary, it doesn’t have to be permanent. After a Chapter 7 or Chapter 13 Bankruptcy, your debt will either be discharged or paid back through a repayment plan. As a result, you can use your bankruptcy to have a fresh start on repairing your credit score and work to keep it high in the future.
Once your bankruptcy is final, there are also many steps you can take to actively improve your credit score. Staying on top of new bills, taking out and repaying small loans, or getting a secured credit card are just a few ideas to improve your score post-bankruptcy.
Deciding if Bankruptcy is Right for You
Ultimately, filing an Atlanta bankruptcy can lead to an improved credit score in the long run. Bankruptcy doesn’t need to be viewed as frightening or a sign of financial failure. Instead, it can be a way to get your financial situation under control now, and a way to move forward to a better credit score in the future—it can be the fresh start you need to begin rebuilding your credit.
If you have questions on how bankruptcy may impact your credit score, contact the experienced attorneys at The Ballard Law Group. Our attorneys are available to meet with you at any time to discuss your debt relief options for your specific financial situation, and what this means for your credit future. To schedule a free bankruptcy consultation, call our office at (404) 800-9939.