How much does bankruptcy REALLY affect your credit?

One of the most common concerns of people considering bankruptcy is the effect that it has on their credit. I am going to write a series of articles that dive more deeply into each of the general concepts I present here.

In our opinion, there are three very important concepts people must focus on when considering the impact of a bankruptcy filing on their credit. The frightened and stressed brain usually jumps to only one concept or thought and stays there. The brain screams, “I’LL NEVER GET CREDIT AGAIN!!” The brain is wrong.

The general concepts are:

Most people filing for bankruptcy already have pretty bad credit due to high balances, late payments, etc. Filing a case does not make it all that much worse. We take the position that people should only use credit for large purchases such as a house or a car. It’s important to have one credit card and pay it in full to help improve your credit rating, but that’s about it. Lastly, you need to measure how much it will cost you in actual dollars to try to dig out without bankruptcy, if that’s even possible. For most, it isn’t. For the few who can, in 95% of the cases it will take many more years and many more thousands of dollars than if that person filed bankruptcy.

Check back in the coming weeks for more detail on each of these topics. In the meantime read more about bankruptcy and credit scores in our series of articles on bankruptcy myths. And if you are in Texas read this article on Do I qualify for Bankruptcy in Texas.