Declaring bankruptcy offers numerous people the opportunity to regain control of their finances each year. However, there are still many who avoid this option and continue to struggle with debt out of concern for their credit score. Fortunately, although scores do initially decline after the filing process begins, it’s possible to start rebuilding a strong credit profile within just a short time. If you’re considering filing, here’s how you can expect your credit score to be affected.                  

What Happens to Your Credit Score After Filing Bankruptcy?

Immediate and Long-Term Effects

Essentially, bankruptcy can be viewed as a trade-off. While it may fully discharge or significantly reduce your financial obligations, it shows lenders that you’re a credit risk. Depending on the type you file, it can stay on your credit report for up to 10 years. Generally, the higher your credit score is when you file, the bigger the impact will be because it has further to drop. On the other hand, if your credit is already low because of your debt problems, bankruptcy isn’t likely to do much more damage. 

How It Can Help Improve Your Score

Debtors sometimes find that bankruptcy actually helps their credit score. Because late and missed payments have a major influence on your credit rating, getting rid of delinquent accounts through bankruptcy can give your score a boost in some cases.

Filing will also give you a fresh start. Trying to raise your credit score with debt looming over your head can seem impossible, whereas recovering with a clean slate is much easier. The key is to make a budget, remain diligent about paying your bills on time, and responsibly use new credit lines once you’re able to get approved. With tools such as secured credit cards for high-risk borrowers, this can be done more painlessly than ever.

Maintaining a good credit score is vital to your financial health, but this can be difficult to do when dealing with insurmountable debt. The Law Office of J. Baron Groshon can explain your bankruptcy options in depth to determine if it’s the most suitable solution for your situation. Attorney Groshon has been helping residents throughout Charlotte, Concord, Gastonia, and Lake Norman, NC, resolve their debt issues for nearly 30 years. He has extensive experience with Chapter 7 and Chapter 13 bankruptcies and will successfully guide you through the legal process to get your finances back on track as quickly as possible. Call (704) 342-2876 to schedule a consultation or visit his website for more information on the filing process.