Does Filing for Bankruptcy Affect the Credit Rating?

Making the decision to file for bankruptcy is rarely an easy one. The road to personal bankruptcy often begins with a solid credit score and responsible credit usage, but unexpected financial difficulties arise. Medical bills, unemployment, or death or divorce combined with high interest rates and severe penalties for missed or late payments spell disaster for hundreds of thousands of Americans every year. Many of them are justifiably concerned with how a bankruptcy petition may affect their credit ratings.

Those who pass the means test are able to file for Chapter 7 bankruptcy. A Chapter 7 will generally remain in your credit history for no more than 10 years from the date you first filed. If you are able to repay a portion of your debts, you will be able to file for Chapter 13 bankruptcy, which will remain on your credit report for seven years from the date of discharge.

Hamid Soleimanian, bankruptcy attorney in California, can help you determine which is best for your situation.

Although the bankruptcy remains on your credit report, your credit will not necessarily be ruined due to your filing. In fact, those who file for bankruptcy after experiencing serious financial difficulties often find their credit scores gradually improve after filing. That’s because the purpose of bankruptcy is to provide you with a clean slate and a financial fresh start.

Because most people struggle financially long before filing for bankruptcy, the damage to their credit score is often far less than they expect. Because your overall credit score is based on a number of factors, including how much debt you carry, it can even improve after bankruptcy. Once the burden of debt is removed, you can begin to rebuild your credit slowly and cautiously. Talk to Hamid Soleimanian, Los Angeles bankruptcy lawyer, to find out more about how filing for bankruptcy can affect your financial situation.

Source: Los Angeles Bankruptcy Attorney

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