Homeowners at risk of default often do not consider bankruptcy an option. They fear the repercussions on their credit history. Over time, you may actually improve your credit report by stripping debts and making timely payments according to a practical reorganization plan.

LA Legal Law Firm can help you understand the possibilities of life after bankruptcy. Instead of late or partial payments, or payments being skipped entirely, bankruptcy can offer a debt restructuring to fit your current means.

Bankruptcy and Your Credit Record

It’s important to understand the damage you may be doing to your credit by avoiding bankruptcy. Sometimes a fresh start is exactly what’s needed. The worst day of your score is the day you decide to file. Immediately after filing your credit will begin to rebuild. But there are also benefits that allow you access to credit in a short amount of time.

  • Chapter 7 bankruptcy: Since your debt-to-income ratio will be lowered due to the discharge of unsecured debt, your credit rating may be less impacted than you think. Like any inquiry or credit reporting this bankruptcy will remain on record for 10 years. However, due to history of default your credit score may not be affected as significantly as you think. Most people are able to rebuild their credit and even qualify to buy a home within 2 years from the date of discharge.
  • Chapter 13 bankruptcy: Chapter 13 bankruptcy will remain on your record for 10 years, like any other inquiry or credit reporting, but by consistently meeting the terms of your repayment plan over three to five years, your credit score will be improved and you can gain a fresh start.