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How does bankruptcy affect my credit score?

Boss Law discusses how bankruptcy can affect your credit score and why it may be beneficial to file for bankruptcy to help improve your credit score if you are struggling with debt.

Transcript

Bankruptcy affects your credit score in a number of ways, good and bad.

So most folks think that bankruptcy is sort of this death to their credit.

The reality is that most of the time if you're in a position where you need bankruptcy, it's because you have a lot of credit card debt or you had judgments or you are facing foreclosure.

Bankruptcy is actually going to improve it.

So, many folks have too much debt, which means that their debt-to-income ratio doesn't allow for them to borrow any more money, and they're going to be repaying way to much debt for a long period of time. Which means, for that same period of time, their credit is hurt.

Bankruptcy wipes that out, and you get to start over. So the irony of bankruptcy is, while it's that half step back, it's that full step forward.

So, four years from a bankruptcy you can get a mortgage.

One year after bankruptcy, usually you'll be able to get a credit card or a car loan.

And so, there's this 7 year and 10 year misconception about credit and bankruptcy.

The reality is that you'll recover much faster than that.

Many people hold off on bankruptcy because of their credit. But the reality is that they should have filed bankruptcy yesterday.

If you need to file for bankruptcy or have concerns about a mistake on your credit report, call us.