People who are considering filing for bankruptcy in order to gain credit card debt relief or help with other kinds of deep indebtedness, often ask what effect this action will have on their credit score. Filing for bankruptcy seems like such a drastic and extreme act that it appears to many that they will never recover from it. We, however, can assure you that this is not the case.
It depends on your starting point
Filing for bankruptcy will be reported on your credit report, but the effect on your credit score will depend on your credit score before filing, and how you rebuild your credit score through sound post-bankruptcy and proven practices for credit restoration. Most Connecticut residents seeking debt relief are great payers with falling credit scores due to their extreme debt-to-income ratio and as reported in their FICO scores as utilization. High credit scores are only available to those who have low debt loads.
People file bankruptcy for debt relief, but it actually improves credit scores.
The Best Way to Rebuild Your Credit
Here’s the hidden ‘beauty’ of bankruptcy. While it’s not good that you find yourself in a situation where you have to file for bankruptcy, it could actually be your cleanest, easiest way out of your difficulties. If you don’t file for bankruptcy and your unpaid debts continue to accumulate, this will be far more damaging to your credit score than bankruptcy is. Additionally, your debt-to-income level will continue to ruin your credit score.
On the contrary, bankruptcy, while often delivering a short-term knock to your credit, not only enables you to reduce your debt load and get your finances under control, but it also immediately starts the process of rebuilding your credit. If you come to the point where bankruptcy is your best option to obtain financial recovery, rest assured that the damage to your credit will be temporary, provided that you take control of your finances. In addition to solving your financial problems, bankruptcy is an effective tool for revitalizing your credit and re-establishing a high credit score.
If you are looking for credit card debt relief, contact the Law Offices of Neil Crane, LLC, the most experienced debt relief attorneys in Connecticut.