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Your Future After Bankruptcy

If you are considering bankruptcy, there’s a good chance that you are concerned about how it will affect your future. It will usually bring immediate improvement to your financial situation and will also certainly remove certain pressures you’re under because of that. That said, it will also appear on your credit report for several years and can affect your interest rates or ability to obtain certain types of loans for a period of time. If you stand to benefit from bankruptcy, your credit is probably already not great to begin with. As such, filing will almost certainly be a net positive for you. Read on to learn more.

Better Financial Situation

Once you decide to file bankruptcy, you will see a rapid improvement in your financial situation. Depending on the type of bankruptcy you file (typically Chapter 7 or Chapter 13), you will find that most of your outstanding debts will be discharged (Chapter 7) or be covered by a court-approved payment plan (Chapter 13). In either case, your money will be easier to manage, and you can go back to answering your phone. As this process reduces your debt, your credit score will improve.

Bankruptcy also imposes an “automatic stay” on most debt collection processes. So, any litigation, phone calls, harassing letters., etc., related to unpaid debt should cease immediately.

Appearance on Your Credit Score

Filing bankruptcy does appear on your credit score as negative information. It will definitely affect the way any future lenders will look at your credit application. Potential lenders may refuse your application or may charge you a significantly higher interest rate. The type of bankruptcy filing you made governs how long it stays on your credit report, but it can be as long as ten years. Credit card companies may deny your application or may charge high fees and interest. Still, if you can get a credit card, even with the higher fees and interest, using it cautiously and paying off the balance monthly can begin the process of rebuilding your credit. In addition, the debts that are eliminated will continue to show on your credit report as “discharged.” Generally, to get a traditional mortgage, you have to wait at least two years after your Chapter 7 bankruptcy discharge. It is essential that you use those two years post-filing to work on improving your credit score.

Filing for bankruptcy can help you get back on the right track. The biggest benefit stems when your negative reporting stops due to the filing. This is the single largest factor in your credit score. When your case ends, it becomes important to take steps to try to rebuild your credit. That way the reporting will show more positive accounts. While the bankruptcy filing will stay on the credit report for an extended period of time, your credit score is what will dictate whether you can get credit. Don’t be alarmed, prudent planning and careful work on your credit can have your score raised in less than a year or two.

Contact a St. Louis Bankruptcy Attorney Today

If you’re considering filing for bankruptcy, it would be wise to consult with a skilled and knowledgeable Missouri bankruptcy attorney before you take any initial steps. This lawyer should be familiar with the workings of your local bankruptcy courts. That experience alone will ease your process considerably. Contact us or call my cell phone at 314-740-2989 for a free initial evaluation of your options.