Bankruptcy is a great solution to a dire financial situation due to debts or medical emergencies. It helps in overcoming such situations and starting afresh on a clean slate. However, there are a few flaws to bankruptcy, and the major flaw which is often feared is the credit score. A credit score is an important factor that often influences bankruptcy decisions. To discover more about bankruptcy and credit score log on to https://www.recoverylawgroup.com/bankruptcy/.
How does bankruptcy look on your credit score?
Bankruptcy is a legal provision to discharge the unpayable debt due to dire financial situations. Since it is a public record, the same is available to all the lenders and the general public as well. Hence, the accessibility of bankruptcy to the lenders as well as the general public is big and hence, the impact is big as well. The bankruptcy impact could prevail on the credit score for as long as 10 years depending on the type of bankruptcy filed. This limits the ability to avail of new credit especially big-ticket credit or unsecured credit. Even if the credit is available, it is often going to be with high-interest rates and unreasonable terms which isn’t going to add to an already shaky financial condition.
The debts which are discharged by the bankruptcy court have a description saying ‘included in bankruptcy’ or ‘discharged’ in the credit report. These accounts will show a $0 balance due next to it however, the same shall appear or be visible to other lenders. But the good thing is the net amount discharged or owed won’t show up here so it might seem to be a big relief seeing a $0 balance due with whatever description it might show.
How to recover your credit score after bankruptcy?
When you are speaking of credit score recovery post-bankruptcy, the most important thing to keep in mind is nothing is instant. No changes can happen overnight and there is a need for disciplined financial practice for a period of 2-3 years to make up somewhat the damage caused by the bankruptcy. Credit score recovery can be done by taking secured credit, paying bills before time, consistently paying all bills before the due date in full, and having similar good financial habits. To ensure your bankruptcy process and credit recovery are on target, dial 888-297-6203 to connect with top-notch, experienced attorneys across Los Angeles & Dallas, TX.