Understanding Bankruptcy and Your Credit

When thinking about your next steps for your future financially, it’s easy to fall prey to information that may be well-meaning but isn’t accurate. If bankruptcy is the right step for you, you should know how to handle this situation and what you need to do to protect yourself.

Common Myths About the Fresno Bankruptcy Process 

If you are struggling with debt, you may wish to avoid bankruptcy for fear of the damage it could do to your credit. However, contrary to popular belief, carrying large balances for long periods of time indicates to potential creditors that you are a risky investment. Even if you pay your minimums, the effects of long-term debt can often do far more damage than filing bankruptcy.

If you have questions about how bankruptcy could affect your credit, we at The Winter Law Group can help you. We represent people in Fresno, California, and throughout the Central Valley through the bankruptcy process, including life after bankruptcy. We will help you understand the relationship between bankruptcy and credit so you can make an informed decision to achieve debt relief.

How Does Bankruptcy Affect Credit?

Chapter 7 will remain on your credit report for 10 years, while Chapter 13 will be reported for seven. While it is true that filing may lower your credit score, you can begin re-establishing your credit-worthiness almost immediately after your bankruptcy successfully closes.

Outside of bankruptcy, you may not realize that your credit does not improve with each debt you pay off — only when the last debt is paid off will your credit start to recover. However, bankruptcy discharges all debts at one time. From that moment on, you can begin to rebuild your credit to gain financial stability and improve your credit risk after bankruptcy.


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What About My Credit Score?

Your credit score is a number creditors use to evaluate your potential risk. With a lower credit score, you may receive a higher interest rate as opposed to someone with a higher score. In general, creditors more often use credit scores to set interest rates and spending limits. Bankruptcy is only one of many factors credit reporting agencies use to calculate your score.

Obtaining Credit After Bankruptcy

It will take time to rebuild your credit. By managing your finances responsibly, however, you can re-establish your credit-worthiness in a fairly short amount of time. Many people who have gone through bankruptcy have gone on to buy cars, homes and obtain credit through patient, diligent efforts. Our attorney can help you set realistic financial goals and take the necessary steps to start building toward them.

It is important to understand that your credit score is only one factor companies use to decide if they will give you a loan to buy what you need. Recent credit history, the amount of other debt and your income levels are often more important than the raw score.

Fresno, CA bankruptcy lawyer

We can help you understand what effect bankruptcy has on your credit so you can make an informed decision about how to proceed. When moving forward with a bankruptcy filing, make sure you speak to an experienced and dedicated bankruptcy lawyer in Fresno.