What Will Bankruptcy Do to Improve My Credit Score

I stopped into one of those “big box” stores in Aurora the other day to pick up some new gloves. The woman in front of me at the check-out was trying to pay with multiple credit cards until she finally found enough room on her cards to cover the total. I couldn’t help but wonder if this woman knew how filing bankruptcy could help her improve her financial situation and improve her credit score.

It might sound strange to consider how filing bankruptcy could help improve your credit score. After all, a bankruptcy could mean that some or even all creditors will get paid little or nothing on the debts you owe them

But the truth is that when filing bankruptcy, collection efforts stop immediately. Garnishment orders stop immediately. Your debts owed go from whatever they are to something a whole lot less or even down to zero.

All of this adds up to a fresh start for you and a slowly improving credit score.

How Bankruptcy Improves Your Credit Score

Many people with serious debt problems think bankruptcy will ruin their credit score forever. This is not correct.

As a matter of fact, If you’re drowning in unpaid debt, bankruptcy might be the best thing you can do to actually improve your credit score.

You’re probably wondering how this can be the case. There are several reasons.

Let’s say you file for a chapter 7 bankruptcy and get all of your debt discharged. Well, now you don’t have those debts on your credit record and this improves your credit score as a result.

Another way a bankruptcy filing can improve your credit score is by providing assurance to potential new creditors that you won’t file for bankruptcy again anytime soon. This is because federal bankruptcy laws limit the number of times you can file bankruptcy.

The law allows you to file only once every eight years. This gives new creditors confidence in their ability to get repaid by you if they give you credit.

When You Should File Bankruptcy to Improve Your Credit Score

The time to think about bankruptcy is when your debts are simply too high for your income and when your credit score is suffering.

The very reason our federal government created bankruptcy laws is to help Americans get a fresh start to a sound financial future.

If a better financial future is what you need, let’s talk. Contact me for a free consultation. Together, we’ll look over your debts, your income sources and your best options for getting the fresh start federal bankruptcy laws guarantee.

 

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