Clearly, a bankruptcy filing is going to have a significant impact on your credit, and the exact details will vary depending upon many different factors. When it comes to your FICO score, if your score was low prior to your bankruptcy filing, the reduction will be minimal. Some people end up with better credit scores immediately after the bankruptcy. If you had a good credit rating before your bankruptcy, the score is going to plummet significantly. While your credit score is definitely going to go down if you file, there can be a silver lining. If you do nothing, your credit score will continually cascade downward month after month. On the other hand, if you take the bull by the horns and file a bankruptcy, you can begin to rebuild your credit sooner rather than later.
Chapter 7 bankruptcy is a liquidation bankruptcy, and it will wipe out all of your unsecured credit card debt. Chapter 13 is a form of bankruptcy that is called a reorganization. You continue to pay your bills with your disposable income when you file for a Chapter 13, but the debts are restructured to be more manageable. Depending on how soon after filing a bankruptcy you need good credit, a chapter 7 and chapter 13 will have different result. The type of bankruptcy that you file for also has an impact on the length of time that it will remain on your credit report. According to Experian.com, a Chapter 13 will be deleted seven years after the filing, and the duration is 10 years for Chapter 7 bankruptcy.
Many people think that they will not be able to get any type of credit for years after a bankruptcy filing, but this is not the case. Depending on the circumstances, you may be able to get credit cards and car loans shortly after your bankruptcy is finalized. However, you will wind up paying inflated rates of interest, and there will typically be significant annual fees and high interest rates on the credit cards. If you have no bad debt after the bankruptcy you will be able to qualify for a good mortgage in as little as 2 or 3 years.
Yes, a bankruptcy is going to have an impact on your credit, but it is not as severe as many individuals are led to believe. We offer no obligation, free case evaluations to people in Medford, Coos Bay, Klamath Falls, and a number of other communities in Oregon and Washington. If you will like to set up an appointment, send us a message through our contact page and we will get back to you in short order.