Bankruptcy myths: A filing will destroy my credit score
Many people struggling to pay off their debts avoid filing for bankruptcy until their situation is extremely dire.
Many people struggling to pay off their debts avoid filing for bankruptcy until their situation is extremely dire – sometimes because they believe that if they seek this type of protection, their credit score will be permanently (or at least for a long time) shot. This simply isn't true.
Experts will tell you that yes, while there is a “penalty” your credit score incurs when you file for bankruptcy, you could be hurt far more by putting off your filing and remaining delinquent in your payments to creditors.
Rod Griffin, a spokesman for Experian, one of the three credit bureaus in the United States, told online magazine SmartMoney, “In virtually every instance, the consumer will already have repayment problems such as late payments, very high balances, charged-off accounts or collection accounts,” which can adversely affect your score.
Experts agree that you may even see a boost in your credit score after declaring bankruptcy, especially if you have been carrying a debt that is disproportionate to your income.
By declaring bankruptcy, you can bring your credit debt much closer into line with your income, which ultimately makes for a higher score, whether you see it immediately or a few years down the road.
If you decide after consulting a Minneapolis bankruptcy law firm to declare bankruptcy, you can ensure that you build up your credit score quickly and steadily by keeping your balances low and making timely payments, which are two of the largest factors that affect your overall credit.
Michael Sheridan of Atlas Law Firm is a Twin Cities bankruptcy lawyer who has a wealth of experience in dealing with cases of varying assets and circumstances. By enlisting his help, you can determine which path is right for you and get your finances back on track.