More likely than not, if you are asking this question, your credit score is already pretty low. If you have struggled for months, or years, with late payments, bounced checks, creditor threats, lawsuits and the like, your credit rating is probably already in the basement.
With that perspective, filing for chapter 7 will likely take your score lower, but the filing may accelerate the time when your credit rating actually rebounds to higher ground. How is that possible?
When you file for bankruptcy, you “wipe the slate clean” by discharging your existing debts. You are no longer legally responsible to pay discharged debt and that frees up cash flow that can be used, hopefully prudently, to pay off quickly and completely new debt you incur after the bankruptcy case.
In addition, creditors know that you cannot get another chapter 7 discharge for 8 years and that factor, together with a relatively clean slate, entices creditors to lend to you, even after you’ve filed for bankruptcy.
You can take advantage of creditors’ willingness to lend you money after bankruptcy to rapidly increase your credit score. Here’s how: Get two credit cards, use them to buy food and gas. Pay the credit cards in full before the due date. Rinse and repeat. If you follow through with this plan and live below your means, you should actually see an increase in your credit score within 2 years of your bankruptcy case.
If you’d like to receive more written information about how bankruptcy might help you, email me at firstname.lastname@example.org.
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