Blog
Law Offices of Chance M. McGhee

Call Today for a FREE Consultation

210-342-3400

How Bad is Bankruptcy for Your Credit Score?

July 30th, 2018 at 3:51 pm

Texas bankruptcy attorney, Texas bankruptcy lawyer, One of the first questions most people ask when considering the bankruptcy option is, “How badly will this impact my credit score?” For many, this fear becomes large enough that it prevents any action, whatsoever. In fact, when surveying any portion of the population, most people agree that the lasting impact on their credit rating is to blame. It is true that filing for bankruptcy will remain on your credit report for up to ten years; however, there are many factors to consider before determining whether bankruptcy is or is not the right solution for you.

The Impact Does Not Last for Ten Years

If you file for Chapter 13, bankruptcy will only remain on your credit score for seven years; Chapter 7 is ten years. However, with each year that passes, the impact bankruptcy has on your credit report diminishes. Recent activity influences your score far more significantly than a negative history. After filing, keep up with your budgetary plan, and you will successfully rebuild your credit quickly.

You Can Still Buy a Home or a Car

Within two years of time, you may be able to apply for an FHA loan for a mortgage payment, which is a guaranteed loan from the government and often has an interest rate lower than its conventional counterpart. Additionally, if you need to purchase a vehicle, many loans may be available to you, albeit at a higher interest rating. After filing for bankruptcy, your credit rating will drop between 150 and 250 points, which may put you in a poor credit bracket. Automobile loans for this credit ranking come with a high interest rate, which inevitably makes the applicant pay thousands more than someone with a higher credit score. A better option is to buy a relatively inexpensive automobile outright with cash for a few years until your credit score improves. If this is not an option, choose an auto loan between $4,000 and $6,000, so your monthly payment is low, despite the higher interest rate.

Your Credit Score Is Already Suffering

By the time most people consider the option of bankruptcy, they have already experienced missed payments, charge-offs, liens, foreclosures, and any number of other financial missteps. Each of these negatively impacts a credit score. Filing for bankruptcy is just another negative mark from which everyone eventually recovers. It is not life-ending, as many would have you believe. Instead, filing for bankruptcy potentially gives you a better opportunity for the future. If you were able to start fresh, you could put money into retirement or savings as you have always wanted, but maybe have never been able to accomplish.

Have Your Questions Answered

Perhaps you are just beginning to consider bankruptcy. Doing research is an essential first step. A Schertz bankruptcy attorney will help answer any questions you may have. Law Offices of Chance M. McGhee has helped clients just like you overcome financial difficulties for the last two decades. We offer cost-efficient, considerate, and compassionate counsel to all of our clients in San Antonio and throughout central Texas. Call us today at 210-342-3400 to schedule your free initial consultation to find out how we can help you.

 

Sources:

https://www.moneycrashers.com/bankruptcy-affect-credit-score/

http://www.txnb.uscourts.gov/

 

Written by Staff Writer

July 30th, 2018 at 3:51 pm

Call today for a FREE Consultation

210-342-3400

Facebook Blog
Back to Top Back to Top