There is a lot of hesitancy when it comes to filing and some of it can stem from this misconception. There are a lot of myths out there about bankruptcy and what it can do. It is likely that if more people had an accurate understanding of this option for debt solution, they would be on board with pursuing it as a valid choice. So what does bankruptcy do to your credit? Does filing mean that you will take a permanent hit on your credit score that you will never fully be able to recover from? This is a myth.
Bankruptcy will initially hurt your credit score, but sometimes taking one step back is necessary so that you can eventually sprint forward. There is no exact answer for how bankruptcy will influence your credit since it varies on a case by case basis. There are certain factors that will impact the outcome and more on that can be discussed with a Chicago bankruptcy lawyer. FICO offered information about this topic in 2010, stating that a filing could lead to 240 points for an individual with a credit score of 780 and 150 points for an individual with a credit score of 680.
The thing about a bankruptcy is that the harm to your credit score will only happen at the beginning. After that you have the option of taking steps to get it moving in the right direction. It is important to understand the full scope of the situation. Since you likely have a considerable amount of debt before you file, your credit score would be harmed already; in fact, without being able to get out of debt it would likely only continue to drop.
A bankruptcy might hurt it at first but by ridding you of your debt it puts you in the position to turn things around. Bankruptcy does not permanently ruin your credit score, but remaining in debt can. Contact our firm today to learn whether bankruptcy is the right choice for your situation.