Bankruptcy can be an effective financial tool for individuals who are facing an overwhelming amount of debt, but those who are thinking about filing should consider all of the drawbacks first. For example, having bankruptcy on your credit report can inhibit you from securing loans for a reasonable rate for several years after you file.
Discharging debt through bankruptcy will not remain on your credit report forever, though, and many individuals who file end up securing new lines of credit much sooner than they anticipated. If you want to learn how declaring bankruptcy will affect your financial situation, contact the Law Office of Stuart M. Nachbar.
Mr. Nachbar is a seasoned bankruptcy lawyer who has been helping clients regain their financial footing for more than two decades. Call 973-567-0954 to schedule a consultation with a New Jersey bankruptcy attorney.
How Long Will Bankruptcy Remain on My Credit Report?
If you file for bankruptcy, it will remain on your credit report for years to come. This is one of the biggest reasons why you should think twice before filing.
As long as there are negative items like bankruptcy on your report, it can affect your ability to secure a credit card, a mortgage, or a car loan; however, if you cannot meet your financial obligations, declaring bankruptcy could actually help improve your credit because it will stop you from accumulating late payments. A single late payment will remain on your credit report for seven years.
According to myFICO, chapter 13 bankruptcy will also remain on your credit report for seven years, while chapter 7 bankruptcy will be reported for 10 years. As for other negative items, collections will typically remain on your credit report for seven years, and unpaid tax liens can remain on your report indefinitely.
Seven to 10 years may sound like a lot, but the older a negative item is, the less it impacts your overall score. For example, a collection that is six years old will not hurt your score as much as a collection that is six months old.
How Can I Repair My Credit after Filing?
One of the easiest ways to start repairing your credit after declaring bankruptcy is by getting a secured credit card. Unlike traditional credit cards, secured cards require an initial deposit, and the amount you deposit is your total line of credit.
If you use the secured card responsibly, your credit will gradually improve, and you will be able to qualify for a regular credit card sooner than you realize. Some people even receive an influx of credit card offers immediately after filing because lenders know they cannot declare bankruptcy again for seven to 10 years.
Accepting one of these traditional offers can help improve your credit, as long as you use the card wisely and always pay it off in full every month; however, keep in mind that any credit card offers you receive after declaring bankruptcy will likely have a low line of credit with a high interest rate.
If you have considered all of the consequences of declaring bankruptcy and you have decided it is the right move for you, contact the Law Office of Stuart M. Nachbar. Call 973-567-0954 to schedule a consultation with a bankruptcy lawyer in New Jersey. You can learn more about bankruptcy proceedings by visiting USAttorneys.com.