Filing for bankruptcy will negatively affect your credit score – that’s a fact. If you’re considering filing, you need to know how badly it’s going to be impacted. You also need to know how long it might take for your finances to recover.
At DeLuca & Associates, we’ve helped tens of thousands of Nevadans file for bankruptcy. It’s important that you understand the impact of bankruptcy on your credit and what to expect in the months and years ahead.
Considering bankruptcy? Contact us today to get a free consultation to discuss your credit score and the recovery process.
How Soon Will My Credit Score Improve After Bankruptcy?
Your credit score may start to improve as soon as 12 months after you file for bankruptcy. By making timely payments on debts, the score improves over time. Eventually, the impact on the credit score decreases. Depending on the type of bankruptcy you file, the legal discharge of debt may remain on your credit report for up to 10 years.
- Chapter 13 bankruptcy – On your record for seven years after the filing date
- Chapter 7 bankruptcy – On your record 10 years after the filing date
How Does Bankruptcy Impact a Person’s Credit Score?
The impact of debt discharge on a person’s credit score depends on what their credit score was when they filed.
- Average score in the mid-600s – Decreases credit score by about 150-200 points
- Higher score in the mid-700s – Decreases credit score by about 200-230 points
- For people with high scores – Decreases credit score by as much as 240 points
Where a person has a very low credit score to begin with, the filing shouldn’t impact their credit score much. A score cannot drop below 300. Even without a significant drop in credit score, it may still take time to improve the score, and the bankruptcy still appears on the credit report.
Learn how filing for bankruptcy can give you the opportunity for a fresh start. Contact DeLuca & Associates today for a FREE consultation.
Can You Improve Your Credit Score After You File for Bankruptcy?
Many people think that bankruptcy leaves a permanent black mark on their financial records. While it does affect your credit score you can rebuild it with time and effort. By taking the right steps and not falling into the same patterns, your scores can and will improve.
In fact, it may be possible to get a credit card only a few months after your debts are discharged. It may also be possible to get a car loan shortly after, but you may pay a higher rate than someone with better credit.
Is It Worth Filing for Bankruptcy?
You may wonder if it’s worth filing for bankruptcy given that your credit score is likely to decrease. While it’s different in every case, the process was designed to relieve you of your debts. With a fresh start, you may have more resources available to make timely monthly payments and get on top of your finances. Ultimately, that’s what can increase your credit score and put you in a better position overall.
Working with a bankruptcy attorney can help you take the right steps towards financial freedom. Our experienced lawyers will speak to collectors on your behalf and ensure you’re treated fairly. If you’re considering filing for bankruptcy in Las Vegas, contact our team today to see how we can support you through this process.
How Can You Recover More Quickly After Bankruptcy?
The steps you take both during and after filing can help you recover faster. First, it’s important to make sure that your case is handled properly.
1. Include All Dischargeable Debts
You need to include debts that are dischargeable. It’s important to ensure that you take full advantage of exclusions and exemptions. Our lawyers can ensure that your interests are represented throughout the process.
2. Stay On Top of Your Credit Score
Then, following the discharge of your debts, you can take action to get your credit back on track. Bankruptcy is a fresh start, and it’s important to make payments on time so you don’t fall into the same patterns. Also, be sure to check your credit report following your bankruptcy to ensure that it is correct. You may need to dispute any errors that remain on your report.
3. Create a Savings Plan
Creating a financial plan, including emergency savings, can help you make your payments going forward and have a backup plan if the unexpected happens. Develop a realistic budget and stick to it. If you need help, there are free online resources to help you follow your savings plan.
4. Always Make Payments on Time
There may be some types of credit that aren’t discharged, like student loans and child support. Make these payments on time to start rebuilding your score. Over time, you can work towards small monthly payment plans and then larger loans, like a car loan, to develop a favorable payment history.
There are things that you can do in both the short term and long term to improve your credit following a discharge of debt. By following these steps, you can begin to see a recovery in your credit score in about 12 months.
You don’t have to go it alone! Our bankruptcy attorneys in Las Vegas can help you get the best outcome. Schedule a FREE consultation now.
Free Consultation With Bankruptcy Attorneys in Las Vegas
It’s inevitable that bankruptcy will decrease your credit score, but how you handle it may impact how quickly you recover. At DeLuca & Associates, it is our goal to help each person receive the best possible outcome from their bankruptcy case.
If you have questions about your financial situation, including unpaid installment loans and high interest rates, contact us today for a free