Bad credit scores can haunt you when it comes time to achieve any of your financial goals that require you to have good credit. If you are having trouble dealing with debt obligations, you may be wondering if bankruptcy is a viable option.
How Bankruptcy Affects Credit
Bankruptcy will stay on your credit report for seven to ten years depending on which chapter you file. Most consumer credit dings remain on your credit for up to seven years. The effect of bankruptcy on your credit will depend on your credit report score prior to bankruptcy. If you already have bad credit, it will impact your credit less than if you have perfect credit prior to filing.
To maintain good credit or restore bad credit, it is necessary to handle all unpaid debts, to pay timely payments on outstanding accounts and use some credit. Using credit actually helps build credit if done properly.
Having bad credit can be a real hassle. It can make it difficult to rent a home, to purchase a vehicle or a home or to gain certain types of employment. Still, sometimes bankruptcy is the best way out of a bad financial situation. Bankruptcy is not the only thing that can lower your credit score. The following can also have a negative impact on your credit score:
- Paying your credit bills late.
- Not paying your credit bills at all.
- Charge offs - which remove debt though you did not actually pay it.
- Defaulting on a loan of any kind.
- Foreclosure on your home.
- A legal judgment against you shows up as a negative mark on your credit report.
- High or maxed out credit card balances.
- Applying for credit. These marks usually only stay on your credit for up to two years.
- Closing credit accounts can also have a negative impact on your credit.
To clean up your credit, you need to make sure you are no longer engaging in any of these bad credit habits or practices.
Getting Legal Help
If you are facing bad credit and overwhelming debt, call a bankruptcy lawyer to find out if filing for Chapter 7 or Chapter 13 can help relieve you of your stress. A lawyer will help you figure out which chapter is right for you. Whether you got in over your head because of bad financial management or a life crisis that reduced your income, an attorney can help you figure out your next move.
