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How Will Bankruptcy Affect My Credit?

Vernon Hills Bankruptcy and Credit Attorneys

Bankruptcy Attorneys Serving Libertyville, Waukegan and Arlington Heights

If you are considering filing for bankruptcy, you probably have many concerns. One of the biggest worries you might have is how bankruptcy will affect your credit and for how long. At Newland & Newland, LLP, we recognize that filing for bankruptcy will have a negative impact on your credit rating. There is no disputing that reality, at least in the short term. In many cases, however, the negative effect on your credit score would be much worse if you did not take any action to resolve your debts.

The skilled attorneys at our firm have more than 60 years of combined legal experience. We are equipped to provide skilled guidance and trusted representation in all types of bankruptcy proceedings. Our team will also work with you to estimate the impact that your filing will have on your credit and to make the best possible decisions for your future.

Credit Concerns in Arlington Heights

The effect on your credit rating will depend on the type of bankruptcy you file and your credit score before you file. Those with high credit ratings will typically experience a larger decrease than those whose credit score is already on the lower side. Most filers will see a decrease of around 130 to 200 points, according to credible estimates. During and immediately after your bankruptcy, you may struggle to find auto loans, mortgages, or credit cards because lenders typically make eligibility decisions based on your credit score.

There is good news, however. As you move forward from your bankruptcy with better financial habits, your credit score will start to go back up again. Our attorneys will help you develop a plan for managing your income and expenses properly so that you can re-establish your credit quickly.

Effects of Chapter 7 Bankruptcy

A successful Chapter 7 bankruptcy will be part of your report for up to ten years after it is completed. Because most of your debts will be discharged in a Chapter 7, those will actually come off your credit report even sooner. Most discharged debts drop from your credit rating after seven years. As you are waiting for the bankruptcy to drop off, you should focus on continuing to meet your obligations and meeting them on time. This is the fastest way to improve your credit rating.

Effects of Chapter 13 Bankruptcy

With a Chapter 13 bankruptcy, both the debts and bankruptcy itself will stay on your credit report for up to seven years. Keep in mind that a Chapter 13 involves a debt repayment plan of between three and five years, so some of the debts will not be discharged until the end of the plan. Those debts will stay on your report for seven more years—possibly longer than the bankruptcy itself.

Contact a Knowledgeable Bankruptcy Attorney

Rebuilding your credit after a bankruptcy requires careful planning, but it also takes persistence and patience. You did not get into debt overnight, and it is going to take time to resolve them. To learn more about how bankruptcy will affect your credit, contact our office. Call 847-549-0000 for a free, confidential consultation at Newland & Newland, LLP today. We offer debts solutions to clients in Libertyville, Arlington Heights, North Chicago, Gurnee, Grayslake, Waukegan, Lake County, and the surrounding communities.

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