It’s widely known that choosing to seek bankruptcy help by filing with a Chapter 7 bankruptcy attorney has long-lasting repercussions on your credit score. A Chapter 7 bankruptcy, which takes just six months to complete, will appear on your credit report for 10 years after you discharge your debts, and can have a serious impact on your ability to get approved for financing, loans and other forms of credit.
However, that shouldn’t dissuade you from getting the financial help you need. If you have been told that a Chapter 7 bankruptcy is the best route you have to resolve your debts, don’t worry about the impact it will have on your credit score — because filing for bankruptcy might actually help you rebuild your credit.
It’s no surprise that individuals who have filed bankruptcy have significantly better credit scores than those who are still struggling with their chronic debts and defaults, according to recent data from the Federal Reserve. That’s because discharging your debts and getting a completely fresh start will allow you to begin establishing good financial habits such as making on-time payments for your bills, meaning your credit score will recover faster.
If you’re still not sure if you should seek out the help of a Chapter 7 bankruptcy attorney, here are three situations in which it makes the most financial sense to file bankruptcy — for the sake of your credit and for your own peace of mind:
- If you’re considering liquidating your 401k or retirement fund in order to pay off your debts — never compromise your retirement savings for the sake of your debt.
- If you are taking out more loans to make payments on your existing debts.
- If you are using credit cards to pay for necessities like food or gas.
Have any other questions for us about how to file bankruptcy with a local bankruptcy attorney? Not sure if you need a Chapter 13 or Chapter 7 bankruptcy attorney? Ask us anything related to bankruptcy law by leaving a comment below.