Myths About Bankruptcy & Credit Scores
When you file for bankruptcy in Florida, it will cause your credit score to go down and will be shown on your credit report for the next 10 years; however, this does not mean that your credit score will remain at rock bottom for all of that time! Most individuals who file for bankruptcy already have an extremely low credit score. This means that filing under Chapter 7 or Chapter 13 will have a negligible impact on their score anyway. By filing for bankruptcy and eliminating their unmanageable debt, they will immediately be free from the burden and will be able to start rebuilding their credit score.
Again, bankruptcy will be shown on your credit report for the next 10 years after filing, but it will not have a continuous damaging effect on your credit during those years. Most consumers are still able to obtain some form of credit after bankruptcy and can begin rebuilding credit from day one. It is highly recommended that you continue to use credit after you file – preferably using a secured credit card or something similar – and use it for smaller, necessary purchases only. By repaying these debts on time over the years, you can repair your credit after bankruptcy until your score is better than ever before, possibly by the time the 10-year period is up!
How Many Points Will You Lose on Your Credit Score?
There is no simple answer or formula that will tell you how exactly filing bankruptcy will affect your credit score. Every individual will lose a varying amount of points off their credit score, but you can expect to lose anywhere between 100 and 150 points. The loss is proportional to what the credit score was prior to filing for bankruptcy, which means that if you had a higher credit score before you file you will lose more points than someone that had lower score. Keep in mind that falling behind on your bills and incurring late fees also has an effect on credit score, so you may be losing points off your score before you even file for bankruptcy.
How Does Bankruptcy Affect Creditworthiness?
Filing for bankruptcy is considered a large black mark on your credit report and is looked upon very poorly by any creditor. Because of what bankruptcy says about your ability to pay back the money you borrow from a creditor, many creditors will not offer to lend you money for years after you file bankruptcy. It may take several years before you can begin receiving any credit offers, and the terms that you may receive may not be very good. This will make purchasing a home, receiving financing for a car, or even taking out a credit card nearly impossible for 7 to 10 years following filing for bankruptcy.
Although filing for bankruptcy can make purchasing anything difficult for several years, it is not a permanent effect. Through careful budgeting, smart spending, and responsible money management it is possible to rebuild your credit score and earn back the credit you once had. The benefit of wiping away a large amount of debt can be worth the affect on your credit score, but it is important to understand how filing bankruptcy will affect you before you file. Make sure to speak with a bankruptcy attorney in Jacksonville before you file for bankruptcy to make sure that it is your best option.
Learn More from a Bankruptcy Attorney in Jacksonville, FL
Contact The Law Offices of Justin McMurray, P.A. today to learn what an experienced lawyer can do to help you file for bankruptcy and rebuild your credit. Our attorneys have assisted thousands of consumers in finding financial freedom after suffering from severe debt. We could help you save your home and eliminate your debt, so contact us today to speak with a lawyer. Your initial consultation is absolutely free, and we offer affordable flat rates and flexible payment plans. Contact our firm now!