Many clients ask me “How does a bankruptcy affect my credit?” A bankruptcy can have a significant impact on your credit. When you file for bankruptcy, it will be recorded on your credit report and stay there for up to 10 years, depending on the type of bankruptcy you file. This can make it more difficult for you to get approved for loans or credit cards and, if you are approved, the interest rates and terms may not be as favorable as they would be for someone with a better credit history.

The immediate effect of a bankruptcy on your credit score will depend on your previous credit history, but in most cases, it can lower your credit score significantly. This can make it more difficult for you to get credit or loans for several years after the bankruptcy, but it is not impossible. You can begin to rebuild your credit by making timely payments on any existing debts and by making an effort to live within your means.

It is important to understand that the negative impact of a bankruptcy on your credit score may not be permanent. Over time, as you establish a positive track record of paying your bills on time and responsibly managing your credit, your credit score will begin to recover. This process can take several years, but with patience and diligence, it is possible to improve your credit score and regain financial stability. In the meantime, it may be helpful to work with a credit counselor or financial advisor to develop a plan for managing your finances and rebuilding your credit.

The bankruptcy case requires you to take two bankruptcy credit counseling courses – one for pre-bankruptcy planning, and one for post bankruptcy debtor education, financial management. Use these courses and the tools provided to emerge from bankruptcy with the skills needed to get back on track and to improve your credit.

Contact me for a free bankruptcy analysis to show you how you can get out of debt and improve your credit.