Bankruptcy Usually Doesn’t Make Your Credit Any Worse

: Chris Lee Law Firm

  Filed under: Credit Tips

Credit scoring

When you get to the point of filing bankruptcy, you are usually hopelessly behind in your debt. Late and missed payments show up on your credit report and lower your score. If you stop making your payments, your score takes a hit. It is unlikely filing bankruptcy will cause your credit to be any worse.

Filing bankruptcy will legally eliminate your obligation to pay most of your debt. And while yes, bankruptcy can stay on your credit report for up to ten years, negative accounts can stay on your credit report for up to seven years. The difference is, you won’t be legally responsible for paying the debt that is eliminated in bankruptcy.

Automatic Stay

When you file bankruptcy, the creditors must stop all collection attempts against you under the automatic stay protection. Phone calls, letters, repossessions, foreclosures, utility shut-offs all must stop during your bankruptcy case.

Secured Debt

If you want to keep your secured debt like your home or your cars, you will need to continue to make those payments so you can keep the collateral. If you file Chapter 13 bankruptcy, you will have three to five years to catch up on back payments on your secured debt. When your credit card debt, medical bills, payday loans, and other unsecured debt is eliminated, your income will go farther to pay your secured debt and living expenses.


People usually do not have to wait the full ten years before credit is available to them again. Soon after you file bankruptcy, you will start to receive credit offers that usually come at a high-interest rate and unfavorable terms. Instead of using the “no credit, bad credit, no problem” lenders If you pay your bills on time and don’t acquire any of the high-interest loans, your prospective lenders will see you are a good candidate for a loan.

If you are considering bankruptcy, contact a Fort Worth bankruptcy attorney to discuss how you can get a fresh financial start.

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