How Does Bankruptcy Affect Your Credit Score?
Credit scores are used by lenders to determine how financially safe it is to enter into a loan agreement with an individual. Unfortunately, it is true that bankruptcy damages a person’s credit score, potentially making it difficult for people to acquire a loan after bankruptcy. However, there are times when an individual’s financial situation is so dire that filing for bankruptcy is worth the risk of damaging your credit score.
If you’re concerned about your future after bankruptcy, we may be able to help you work through the bankruptcy process and offer important advice about what comes next. To discuss what options are available to you, contact a Joliet bankruptcy attorney of the Law Offices of Stuart B. Handelman today at 815-722-2201.
Credit Scores and Debt
When a person considers bankruptcy, it is usually because he or she is deeply in debt and possibly facing foreclosure. At this point, a person’s credit score is typically already damaged due to missed or late payments. In these situations, bankruptcy provides a chance to free yourself from debt and start over again.
The following may lower a person’s credit score before he or she files for bankruptcy:
- Failing to make payments
- Accruing more debt to cover old debts
While bankruptcy may harm a person’s credit score in the short-term, it ultimately frees a person from his or her debts in order to rebuild a credit score through positive credit actions. Rebuilding your credit score after bankruptcy often occurs faster than if you are still struggling against long-term debt.
If you’re considering bankruptcy but are frightened about how it affects your credit, we may be able to answer your questions and deal with your concerns. To learn more about how bankruptcy works and what it means for a person’s long-term financial health, contact a Joliet bankruptcy attorney of the Law Offices of Stuart B. Handelman today by calling 815-722-2201.