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Are you considering filing for bankruptcy and wondering what it will do to your credit score? Or have you already filed for bankruptcy and are looking for ways to rebuild your credit? Either way, understanding the impact of bankruptcy on your credit score is a crucial part of the process.
Bankruptcy can be an intimidating topic, but with the right information and advice from a New Bedford Bankruptcy Attorney like Logan Weinkauf P.C., you can make informed decisions about how best to protect yourself financially. In this article, we’ll look at what bankruptcy is, different types of bankruptcies and their impacts on credit scores, steps to rebuilding after filing for bankruptcy, tips from a New Bedford Bankruptcy Attorney on improving post-bankruptcy credit scores, long-term effects of filing for bankruptcy on finances as well as questions one should ask themselves before deciding whether or not to file for bankruptcy. Table of contents
What is Bankruptcy and How Does it Affect Your Credit Score
Bankruptcy is a legal process that allows individuals or businesses to eliminate or reduce their debts. When you file for bankruptcy, an automatic stay goes into effect which prohibits creditors from collecting on your debt. Depending on the type of bankruptcy filed, some assets may be liquidated in order to pay off creditors.
When filing for bankruptcy, it’s important to understand how this will affect your credit score. Generally speaking, filing for bankruptcy can significantly lower your credit score as it is seen as a major negative mark by lenders and other financial institutions. However, there are steps you can take to rebuild your credit post-bankruptcy with the help of a New Bedford Bankruptcy Attorney like Logan Weinkauf P.C..
The Different Types of Bankruptcy and Their Impact on Your Credit Scores
There are two main types of bankruptcy available for individuals to file: Chapter 7 and Chapter 13. The type of bankruptcy you choose will depend on your unique financial situation, but both have a significant impact on your credit score.
Chapter 7 bankruptcy is the most common type of bankruptcy and involves liquidating assets to pay off creditors. This type of bankruptcy stays on your credit report for 10 years, so it will significantly reduce your credit score in the short term.
Chapter 13 bankruptcy, also known as a reorganization or debt adjustment, does not involve liquidating your assets. In this type of bankruptcy, you enter a repayment plan with creditors that lasts 3-5 years. During the repayment period, you will make monthly payments to creditors and your debt will be discharged at the end of the term. Chapter 13 bankruptcies stay on your credit report for 7 years and will also significantly lower your credit score in the short term.
Steps to Rebuilding Credit After Bankruptcy
Rebuilding your credit after bankruptcy can be a daunting task, but with some patience and diligence, it is possible. The first step towards rebuilding your credit score is to make sure you pay all of your bills on time. Late payments will only further damage your credit score, so it’s important to make sure that you always pay at least the minimum payment each month.
The next step is to consider getting a secured credit card. Secured credit cards are easier to obtain after bankruptcy and can help you slowly rebuild your credit score. With this type of card, you will need to put down a cash deposit which will serve as your credit limit. If you make all of your payments on time and do not exceed the credit limit, this can help boost your credit score over time.
Tips from New Bedford Bankruptcy Attorney Logan Weinkauf P.C.
At Logan Weinkauf P.C., we understand how difficult it can be to rebuild your credit after bankruptcy and we want to help. As a New Bedford Bankruptcy Attorney, here are some of our tips for improving your post-bankruptcy credit score:
- Make sure that you are avoiding any major purchases or applying for new loans while you are in the process of rebuilding your credit.
- Consider talking to a financial advisor about what other steps you can take towards rebuilding your credit score.
- Take advantage of free resources available online such as budgeting tools and debt calculators so that you can stay on top of your finances and start making positive changes with regards to money management.
Contact Logan Weinkauf P.C. for a Free Consultation
If you are considering filing for bankruptcy in New Bedford or the surrounding areas, contact Logan Weinkauf P.C. Our team is experienced in helping individuals make decisions about their financial future and can provide you with the advice and guidance you need to make the best decision for your situation. Call us today for a free consultation!
Attorney Logan A. Weinkauf is ready to help you. Call 508-375-3878 or use our no obligation case evaluation form on our website’s home page.